NHS pension

[theone8181]

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

 

[theone8181]

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?

 

[theone8181]

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!

Yes, she currently works for boots. I'm not sure what other penalties there are, I just assumed it would be whatever was paid in less a little bit.

 

[theone8181]

It's worse than that as I was looking at it, they penalise you from retirement age (rather than a specific age) so you can bet if that went upto 70 (a real possibility) shed loose even more. What I can't understand is what the benefit of the company paying in is, i.e., whether they put 10% or 100% of your salary in, surely your final salary is the same? I do think 45% is a joke, although she won't have a massive amount in it. Guess she'll have to work till she drops. I know it's a long way away, I wonder if her dropping to part time would make a difference to her payout.