NHS pension

theone8181 · 15 Sep 2020 at 19:38

Sorry if this is in the wrong thread but my wife is starting a new job soon. I've been researching the NHS pension as I assume she will go into it by default (pharmacist in drs surgery). So is it as good as it looks, from looking in the internet NHS contribute 14% and she'd be putting in 10 or so. I'm going to get her to ask her new boss/hr but I'd just like to be forewarned on it.

Cheers

Azza · 15 Sep 2020 at 19:43

Cost depends on your pay - https://www.nhsbsa.nhs.uk/member-hub/cost-being-scheme

In return you get 1/54 for each years’ pensionable earnings.

Minstadave · 15 Sep 2020 at 21:16

It's a pretty good scheme although it was neutered substantially by the 2015 changes it's still about as good as it gets from a pension point of view.

As said above your pension contribution depends on your total pay.

Employee contribution is pre-tax.

booyaka · 15 Sep 2020 at 21:39

Minstadave said:
It's a pretty good scheme although it was neutered substantially by the 2015 changes it's still about as good as it gets from a pension point of view.

As said above your pension contribution depends on your total pay.

Employee contribution is pre-tax.

as above - pay into it - forget about it for a while. Best your going to get.

FortuitousFluke · 15 Sep 2020 at 21:41

Contributions are largely irrelevant, its a CARE scheme. As another poster mentioned 1/54th of your annual salary for each year paid in.

doopydug · 15 Sep 2020 at 23:08

FortuitousFluke said:
Contributions are largely irrelevant, its a CARE scheme. As another poster mentioned 1/54th of your annual salary for each year paid in.

What does that mean? Its pointless to make extra contributions?

FMF · 15 Sep 2020 at 23:13

doopydug said:
What does that mean? Its pointless to make extra contributions?

Sounds like a defined benefit scheme, why are we still paying for these when everyone else has moved onto contribution based schemes.

Azza · 15 Sep 2020 at 23:38

doopydug said:
What does that mean? Its pointless to make extra contributions?

Career Average Re-valued Earnings pension.

Say OPs wife is earns £40k in a tax year she'll get 1/54 of that 'average' salary so ~£740 in pension. Next year she might get a pay rise mid year and her pay for that tax year works out to be £43k so she'll get ~£796 in pension. And so on and so on, that all adds up while you're employed and then you get that as your pension.

On £40k the monthly pension contribution from her salary would be 9.3%, so £310 according to listentotaxman.com. Effectively paid £3720 to get a 'guaranteed' £740 a year from state pension age.

You can make additional contributions in the form of 'buying additional pension' and there will probably be some form of voluntary contribution scheme run by a pension provider, but there won't be employer contributions, just employee.

neviditelny · 16 Sep 2020 at 03:51

@Azza I'm not sure if I understand. I work for the NHS too, and got am in the NHS pension scheme too. Not sure I understand this bit about "guaranteed" pension etc. Coudl you explain it a bit further? Or link me to somewhere where I could read about it?

theone8181 · 16 Sep 2020 at 06:31

Azza said:
Career Average Re-valued Earnings pension.

Say OPs wife is earns £40k in a tax year she'll get 1/54 of that 'average' salary so ~£740 in pension. Next year she might get a pay rise mid year and her pay for that tax year works out to be £43k so she'll get ~£796 in pension. And so on and so on, that all adds up while you're employed and then you get that as your pension.

On £40k the monthly pension contribution from her salary would be 9.3%, so £310 according to listentotaxman.com. Effectively paid £3720 to get a 'guaranteed' £740 a year from state pension age.

You can make additional contributions in the form of 'buying additional pension' and there will probably be some form of voluntary contribution scheme run by a pension provider, but there won't be employer contributions, just employee.

Funnily enough she is going to be earning the exact amount from your example

. I wasn't sure as we are both 34 and wanting to retire at 55 (well I am anyway

), how much she'd end up with, 21/54ths of her final salary? What do you gain by paying extra, an extra 54th?

FortuitousFluke · 16 Sep 2020 at 06:41

doopydug said:
What does that mean? Its pointless to make extra contributions?

Azza's response is spot on here so I can't really add anything else. Bottom line it's a decent scheme in terms of comparison with the rest of the market so that's a bonus for you.

tamzzy · 16 Sep 2020 at 07:15

theone8181 said:
Funnily enough she is going to be earning the exact amount from your example. I wasn't sure as we are both 34 and wanting to retire at 55 (well I am anyway), how much she'd end up with, 21/54ths of her final salary? What do you gain by paying extra, an extra 54th?

Note that the pension is based on the state retirement age (currently 65)
If one is going to retire 10 years earlier, the reduction is pretty significant. The pension would be c60%
So in this case...
21 years x £730 x 0.6 = £9300/yr

Also jfyi that the pension calculations are based on basic pay without additional pay supplement/uplifts (eg nights weekends etc). So if the £43k is based on, say £30k basic salary, and £13k for nights/weekends and on-calls, then the number for the purposes of pension is £30k

danoliver1 · 16 Sep 2020 at 07:42

When your wife starts her job she should get access to a website https://www.totalrewardstatements.nhs.uk/
Its lets you keep a track on what you've paid in etc.

tom_nieto · 16 Sep 2020 at 09:06

theone8181 said:
Funnily enough she is going to be earning the exact amount from your example. I wasn't sure as we are both 34 and wanting to retire at 55 (well I am anyway), how much she'd end up with, 21/54ths of her final salary? What do you gain by paying extra, an extra 54th?

The NHS pension scheme is still pretty good despite the 2015 changes. Is this her first NHS job?

The main issue with the NHS pension scheme is the heavy penalty on taking it early. Retiring at 55 means you would lose 45% of your contributions:
https://www.nhsbsa.nhs.uk/sites/default/files/2017-03/ARER factsheet (03.2017) V7.pdf

I certainly don't plan to be a 67 year old practicing surgeon, but living costs money!

Pawnless Endgame · 16 Sep 2020 at 10:04

Pension? There won't be any when we retire. Private and public schemes (I'm NHS too btw) will all be sink-holed by the time us middle-aged hit the late 60s. We have to be realistic I'm afraid.

Kill_Phil · 16 Sep 2020 at 10:16

Pawnless Endgame said:
Pension? There won't be any when we retire. Private and public schemes (I'm NHS too btw) will all be sink-holed by the time us middle-aged hit the late 60s. We have to be realistic I'm afraid.

This pretty much. Pensions are just a massive ponzi scheme

ivrytwr3 · 16 Sep 2020 at 13:48

Pawnless Endgame said:
Pension? There won't be any when we retire. Private and public schemes (I'm NHS too btw) will all be sink-holed by the time us middle-aged hit the late 60s. We have to be realistic I'm afraid.

Kill_Phil said:
This pretty much. Pensions are just a massive ponzi scheme

There will be no pensions in what? 15 - 20 years? Wut? Lol!

Semple · 16 Sep 2020 at 13:57

Kill_Phil said:
This pretty much. Pensions are just a massive ponzi scheme

That's not really the case for the majority of private pension schemes from the last ~10 years.

Uther · 16 Sep 2020 at 16:20

Kill_Phil said:
This pretty much. Pensions are just a massive ponzi scheme

Yeah I used to think that when I was young, now here I am at 55 with quite a nice pension that I wish I'd paid a lot more into when I had the chance...

Kill_Phil · 16 Sep 2020 at 16:44

Uther said:
Yeah I used to think that when I was young, now here I am at 55 with quite a nice pension that I wish I'd paid a lot more into when I had the chance...

Yeah of course people need to plan for retirement but the goals posts are constantly shifting cause the numbers aren't sustainable.

The days of gold plated pensions are over and everyone else is having to pay for them