[SA320]

Hi All

My wife is a GP and is on the NHS pension scheme. It's 'supposedly' meant to be one of the best schemes out there and her employer contributes 12.5% of her salary, however it appears that there is no transparency in the scheme. We're concerned because not only is it a significant amount that she is contributing each month but also that she wouldn't be able to touch it until she is 65 (yes, I'm aware that's the case even with a personal pension).

We are thinking about opting her out because I am in the property business and I personally feel that the increased amount she would be getting in her pay packet instead of contributing to her pension could build up to put a deposit on a flat which in turn would be a better investment all round (Yield, equity rise and access to the funds as and when needed).

Does anyone think otherwise? Any thoughts?

Many thanks

[wallsmk2]

For her it's a no brainer. Employer contributions etc and pretty well protected if things in the world go tits up, and god forbid that she may end up on her own at some point in the future

Property may be more lucrative but much more risky. Better for you as you get a chunk of course . But you'd be mad to opt out of a government funded pension in my opinion.

I have everything in property and that gives me sleepless nights sometimes, when the rents are a bit late. Something to be said for a bit of security. Best thing to do though is take some proper financial advice to see how things stack up.

[djgandy]

12.5% contribution! Government really is a gravy train eh.

Not sure of full circumstances, what her contribution is etc, but I'd most likely always keep the pension.

For example if you contribute 5% and they add 12.5%, you are getting 17.5% p/a. If shes in the 40% bracket, the 5% gross, becomes 3% net pay. So you get 3% extra pay but lose 17.5% in a pension. It's just crazy to give that up.

So the "significant contribution" is probably not really that much. I put "4%" in each month, but if I took that money in my pay, it's probably only 2.5% or so. And then there is HMRC contribution and employer contribution. So the choice for me is 2.5% in my pocket now, which is not really that much, or 10% or so in a fund. So my 2.5% buys me 10% which is 4x the amount.

Not paying tax is generally the best investment you can make.

[dar2008]

"her employer contributes 12.5% of her salary"

Absolute no brainer, or course she should stay in the NHS pension, it's free money!

[Nick the Greek]

Firstly.

Just to correct you.

You can retire from a money purchase pension scheme (SIPP, Stakeholder, Personal) from age 55.

Secondly.

Under NO circumstances do anything, until you take professional advice. There will be a fee to pay. The cost of getting it wrong could be tens of thousands of pounds.

Never take advice on pensions from a car forum. There will be many opinions, but very few facts. I used to teach pensions law.

[gangzoom]

Originally Posted by SA320

Hi All

My wife is a GP and is on the NHS pension scheme. It's 'supposedly' meant to be one of the best schemes out there and her employer contributes 12.5% of her salary, however it appears that there is no transparency in the scheme. We're concerned because not only is it a significant amount that she is contributing each month but also that she wouldn't be able to touch it until she is 65 (yes, I'm aware that's the case even with a personal pension).

We are thinking about opting her out because I am in the property business and I personally feel that the increased amount she would be getting in her pay packet instead of contributing to her pension could build up to put a deposit on a flat which in turn would be a better investment all round (Yield, equity rise and access to the funds as and when needed).

Does anyone think otherwise? Any thoughts?

Many thanks

I haven't looked at the NHS pension scheme in any great detail, but from what I understand my of our family friends who are on private pensions cannot believe how good it is, especially given the lack of 'risk'.

As someone has mentioned already, think carefully before opting out, even a temporary stop to contributions reduce your final pension pot by a huge amount. The fact NO ONE I know who has a NHS pension scheme has opted out suggests to me you have to be very very clever to beat the NHS scheme in the long run....

Is your wife is a GP partner, because I thought been an employer makes you not eligible for the NHS scheme...I know a few of my friends who are GPs, and the NHS pension scheme is just about the only thing they miss in regards to working in hospital/been a NHS employee.

[makkan00]

Originally Posted by SA320

Hi All

My wife is a GP and is on the NHS pension scheme. It's 'supposedly' meant to be one of the best schemes out there and her employer contributes 12.5% of her salary, however it appears that there is no transparency in the scheme. We're concerned because not only is it a significant amount that she is contributing each month but also that she wouldn't be able to touch it until she is 65 (yes, I'm aware that's the case even with a personal pension).

We are thinking about opting her out because I am in the property business and I personally feel that the increased amount she would be getting in her pay packet instead of contributing to her pension could build up to put a deposit on a flat which in turn would be a better investment all round (Yield, equity rise and access to the funds as and when needed).

Does anyone think otherwise? Any thoughts?

Many thanks

There are different nhs pension schemes. Do you know under which category she comes?

AFAIK, latest scheme was rubbish where there was no final lump sump and your pension would be based on the numbers of years that you served NHS and your average salary over those years (not final year salary as opposed to previous schemes).

If your other half comes under old schemes, do not risk leaving it.
As if you join nhs pension again, you will have to go under the latest scheme.

I left NHS last year and I discussed about it with the trust pension advisor. I was told that they were going to launch new scheme this year where final pension depends on how many years you work and how much you contribute into your pension pot. No more pension based on your final year salary.

I have similar thinking like yours and hence taking risk and leaving nhs. Earn more and invest in better places if you are ready to take risk and hassle.

If your Mrs has started paying pension in last 12-18 months, then she can get that back while opting out. If she joined more than 18 months ago and if she opt out then she will still get nhs pension based on her 'contribution'. This is what I was told.

[225_AB]

Take professional advice.

There are a number of NHS pension schemes depending upon when she entered the scheme and her predicted retirement date.

Some info here

http://www.nhsbsa.nhs.uk/Pensions/4017.aspx

Ps in ALL the schemes the amount you receive is linked to the number of years that you have contributed but the calculation has as indicated earlier changed from a percentage of final salary to a career average scheme.

[ahmedb]

I used to work in the NHS. One of the main perks of working in the public sector was the pension scheme.

The pensions are very generous. Not as good as they used to be but still much better than the private sector (generally speaking of course).