Are NHS pension contributions compulsory?

[lljkk]

Just point me at another thread ,if there is one, already.

This thing about lifting the cap on tax-free pension contributions, to tempt NHS consultants back to work. Why don't they still work but stop making pension contributions.

Explain it to me like I'm 5 ? If anyone understands. Ta.

I believe you lose things like death in service etc.

Agree with pp, and the pension is also a really valuable part of the benefits package for older NHS workers - it can be more than 1/3 of the salary again on top. So opting out of the pension scheme means giving that up and effectively taking a massive pay cut

Not compulsory but if you opt out you lose all of the potential employers payments and you still potentially get for tax on the value of the growth of the pot if it’s a high inflation year.

Opting out effectively works out around a 25% pay cut once the employers contributions and cost of providing your own additional life insurance etc are factored in. Also in the older pension scheme you don’t get any benefit for delaying retirement beyond 60. If you retire at 61 the money you would have received for the year just disappeared.

You are right to suggest opting out is one solution, but most people don’t want to keep working but at a substantial effective paycut, especially if they are in a position where they can retire or do other things (limited company private work) which can be far more tax efficient even if not always that much better paid.

it's not pay cut in take home pay, though.

Neah, still sounds greedy to insist on such high benefits to be sustained. What did news say, that the subsidy would be £100k on each NHS consultant came back (optimistic / high return scenario).

So is the solution to taper down pension tax relief or contributions so that there isn't such an apparent cliff edge in "pay" cut?

It is a cut in take home pay versus working less in many circumstances or changing the work they do away from nhs paye work. It is in any set of circumstances a cut in hourly take home pay once delayed renumeration via pension is accounted for.

Reducing overall renumeration further for nhs work doesn’t make sense at all in the face of huge staff retention problems.

Unfortunately we are facing a worldwide skills shortage and pay is important to retain workers.

so why won't these ex-NHS doctors go into private practice, get the best of both worlds? Pension growth without tax penalty and all that flexibility.

If NHS pension is a an average salary scheme, and tops up contributions by 20%, why not taper down NHS contribs to an employee's pot once the pot reaches £500k ,rather than abolish the tax at £1million. This would be more equitable and still incentivise working for NHS.

Lots of doctors have left to private practice etc later in their careers. That’s exactly the problem that the government are trying to address, the loss of staff to other forms of employment due to the problematic nature of defined benefit pension taxation.