My niece (in-law) did not start one as she was going to set up her own practice. Never happened.

I've worked with so many people over the years including up to yesterday that say either "I never joined until too late because I didn't think I'd stay" or "I opted out after a while thinking I'd re-join after I'd paid off this or that" or "I thought 5% was a bit steep, didn't know what I was going to miss out on".

The reality is though I never knew what a good deal it was when I joined it, I took in good faith that the man telling my 21 year old self that I had to join and that he was retiring in 2 years time at 55, was a bargain, I thought 55 was old and 65 ancient, I now tell my 55 year old self that 55 is the new 45! And that old is 80 like my mothers age!

As a taxpayer I can only see a massive upside both short and long term from govt employees opting out of db pensions.

I can still remember a chap I started work with telling me he wouldn't be there long. That was over 40 years ago and when I checked earlier this year he was still there. "Short term" jobs turn into long term ones.

No but in most cases it is dud. If a few % of your salary is so important you either need a clear plan(to use it) or are living beyond your means, when weighed against your future. Saying you do not need to plan for your future when for a few % of your salary your employer is contributing 15-20% of salary to your future is reckless. If you plan to leave in a couple years choose their DC option and still get a sizeable employer's contribution.

So she had no real plan just a vague aspiration and could have been benefiting from employer contributions…….

Absolutely, but if these same employees eventually retire and claim benefits in retirement not only are they poor but they are also costing the government more in the future.

Well as taxpayers let's hope everyone else only does a little bit of pension saving so they only accumulate enough income to keep then off benefits. Oh yes auto-enrollment...

Alex

Flat rate tax relief in budget , would mean more people will leave NHS pension. Unintended consequences!

I used to often have these types of arguments/discussions with my friends when we were 18 to 20. Not because of pensions, but because I was working full time and running a business which took up a lot of my spare time. They believed that enjoying yourself was a priority when you are young, because you could work hard later. I had the opposite opinion, when I was younger, I believed that I could both work hard and play hard, and that it would also set me up to have a better life when I was older. I'm 60 now, I work one day per week, I don't have to, but I like my job, and I didn't want to fully retire. Although I am thinking about retiring soon, because although I like my job, there are other things that I like better, and I have been trying to work out if I carry on because I can't let go. I probably can't realistically spend the money that I earn, because I already have more than enough. I keep going around in circles when I try and make a decision.

I was talking to someone who was wanting to recruit an IT specialist. They were offering £50k a year full time. The only guy with the necessary qualifications said "I'm a surfer. Pay me £40k a year for a 4 day week. I want to surf on a Friday." They weren't sure whether to give him the job. And then I read this article:
https://www.gponline.com/vast-majority-gp-trainees-not-plan-work-full-time-survey-reveals/article/1490660
At the risk of sounding sexist I would have expected most male GPs to want full-time work.
As the state pension age gets closer to average age of death (which is quite low in some areas and social classes) then people don't see retirement as a part of their life. Maybe they then say "OK I'll never retire. Let's have more leisure time now."

I am over age 55 with a decently sized pension pot and no longer working, but If I had my time over again I would do the same.

The government moves the pension saving goalposts at every budget, and has turned 'retirement planning' into an oxymoron. And with steeply progressive tax rates that trigger at relatively low (and not inflation-adjusted) levels, even an average wage of £25k or so spread over two years in half-time work will be worth more to an employee than the same amount earned in one full-time year and then nothing in the second. The effect is more pronounced in higher rate tax, and dramatic once you encounter the appalling effective 60% rate above £100k.

Working fewer hours per week but for more years overall is a completely rational response to an irrational -- not to mention, unstable -- system.

I know lots of GPs and medical consultants. I don't know any that work 5 days - they all work 4 days. Partly it's a recognition that the workload is simply too much - particularly where the GPs are running their own practice.


I earn roughly £125,000 pa.
That's nice and in line with my peers in the very specialist end of my profession.
Those of us who are still contributing to a pension are throwing everything into pension contribution, to get the taxable earnings down to £100,000.
Those who cannot (LTA) are reducing their working hours to bring the taxable earnings down to £100,000.


It links to the "flat rate" thread and other possibilities around reducing LTA / raising the access age to personal pensions etc.
If I can no longer keep contributing to the pension tax-efficiently, and have to suffer a punitive 62% / 67% marginal tax rate on earnings above £100,000 then I will prioritise my sanity, health and family time. I will work 4 days for £100,000 instead.


I do not see that working the fifth day, and taking home 1/3 of the money I earn for that extra work, is worthwhile (or fair and equitable), and am fortunate enough that my employer can and will allow this if I request.

The government haven't been very kind to the NHS on payrises etc.

Can you blame them for not wanting to invest in a pension, which the government set the rules on?

Which is why NHS workers should grab their pensions with both hands, so they don't miss out on them as well!

Yes, I'm afraid I can blame them. I took a series of public sector jobs later in life specifically in order to make up for investing in an Equitable Life with-profits pension earlier in life that worked out badly.

Please please don't ever turn down the opportunity to join a public sector pension or you will regret it later on.

I have a distrust of the government, especially this current government..

I'm in the private sector... 17% of my income is going into a private pension. I am 34, but the rules will more than likely change several times before I can get near it... at the moment it's 57, God knows what it will be when I think of accessing it..... 67 or later? :/

One of the issues is that the benefits of the pension scheme aren't explained, I get the impression that the administrators don't even know how the scheme works. Looking at the illustration from 2015 onward it states that the scheme works by:

1. Taking 1/54 of your annual salary and putting that into a pension pot for the year.
2. Each year you get a new pension pot.
2b. The previous years (and any existing pension pots) are multiplied by 1.5% + the treasury order rate.
3. At retirement age, you take the values for each year's pot, add it up and then it gives you your pension.

I asked my administrators for a pension valuation in 30 years time, they said it's illegal to give financial advice and that they couldn't predict pay rises and treasury order rates (never mind the fact I asked them to make conservative assumptions). I then decided to build my own Excel model

Starting salary: 48,800
treasury order rate + 1.5% = 2%,
inflation = 2%
annual pay rise = 0.5%

After 30 years, inflation adjusted, gives an annual pension of £29K.
During the same period, I would have paid £126k into the pension scheme (although it's more like £100k with tax relief).

So basically, if I live for an additional 3.5 years after I retire, the pension would have paid for itself. Unless I've got my sums wrong, the NHS pension seems like a no brainer....

At the moment minimum pension age is 55. The Treasury announced several years ago it would change to State Pension age minus 10 years. Your State Pension age is 68, so if it is changed your minimum pension age will become 58, plus any further increases to your State Pension age (which are quite likely).

The Treasury order is a measure of the change in prices, currently based on CPI. This would be therefore be 3.5%.

Not sure there would be many left working the NHS if pay experiences real term cuts of 1.5% for the next 30 years. The Treasury assume pay increases of 4.2% p/a from 2023.

The normal result. The assumption of 30 years of continuous service somewhat flatters the analysis, as you gain from the in-service revaluation whereas if you leave earlier you just get straight CPI.

"Not sure there would be many left working the NHS if pay experiences real term cuts of 1.5% for the next 30 years. The Treasury assume pay increases of 4.2% p/a from 2023."

Fair enough, I wanted some conservative values that would be closer to worse case scenarios rather than optimistic values...

Very much agree with this.

Over the last decade I've prioritised pension contributions well beyond what a normal strategy in a stable system would, simply because I want to take advantage of incentives to the maximum extent I can before they are changed. That has left my financial resources a bit imbalanced in favour of pensions. I am now pretty much sorted for the post 55 stage of my life, and cannot justify significant further voluntary pension contributions.

By choosing to work fewer hours, doing about 75% full-time equivalent, I could increase my net take home pay (calculated on a per hour basis) by 5.6%. Although that isn't a huge difference, it is quite compelling nonetheless, given I need to work fewer days overall to reach my financial goal. It doesn't seem to make much sense to work more than optimal in order to reach a position of not working at all a little sooner. Currently a move to part-time work is planned for mid-2020, after the last of some favourable voluntary pension contribution arrangements become maxed out.

But even before actually reducing hours, I've already effectively started to partially retire by not pursing progression for the last decade. When I did the calculations, the net pay for a promotion would mean that rather than work another 13 years, I would only need to work 12 at a higher level. It just wasn't worth the extra effort, I'd far prefer an easy life for 13 years than a much more stressful one for 12 years, followed by a year off. Instead I took a job at the same pay with less responsibility (which I am still doing), enabling me to enjoy a much better lifestyle overall and do things like start my own business, etc, to take advantage of different ways of receiving income.

Between 10-15 years ago, I also used unpaid leave a couple of times to go traveling. By timing my departure and return carefully, I could avoid higher rate tax in the year I left and the year I returned, which was a nice bonus. This was a noticeable increase to my net earnings per month in the year I left and came back.

Personally I can't complain about all these strange incentives in the system to manipulate, I've done well out of them, but I very much doubt have much place in an efficient and fair system.

Are there any stats on how often the government have shifted the goal posts for lifting your pension? It is a concern I have that the money could be forever out of reach !

Like I said, relatively trivial. In fact it's less than that, it's peanuts. The UK tax take is £600 billion.

A 2,000% increase from half a peanut to a bag of peanuts is still peanuts.

Headlines about "Tax break for Teresa's rich chums" are irrelevant as half the media will print the headline "Tax break for Teresa's rich chums" regardless of what is in the budget.