To opt out of NHS pension to make childcare more affordable?

[pensionoptout]

Am I going to regret this?? I've temporarily opted out of my NHS pension contributions to make our childcare expenses more affordable. It will probably be for around 18 months or so I think, hopefully less. Has anyone done this? Is it a bad financial decision?

Could you go on a mortgage holiday or switch to interest only, then pump those savings into your tax free childcare account?

If you aren’t contributing to your nhs pension, nor is your employer. You are in effect giving away an awful lot of ‘free’ money.

You don’t need holidays for a couple of years. Would strongly recommend opting back in any finding any other way, if you can.

Let’s hope you don’t pass away during the interim if you opt out.
Having to explain to grieving relatives that their loved one opted out and therefore no benefits is one of the hardest parts of my job

Go through both your outgoings with a fine tooth comb.
Look at both your incomes.
Do everything you possibly can to get back into the pension.

If you don't pay into the NHS pension you are missing out on the employers contributions - these are currently around 14%.

@Tootiredallthetime

Could you go on a mortgage holiday or switch to interest only, then pump those savings into your tax free childcare account?

We rent our house, no mortgage.

@Polkadotties

Let’s hope you don’t pass away during the interim if you opt out. Having to explain to grieving relatives that their loved one opted out and therefore no benefits is one of the hardest parts of my job

this is awful. It's made me feel really worried actually.

Has he got a pension? He should be doing the same. You say “partner”, are you married?

I wouldn’t. Unless… you can pay it back in at some point?

OP there are lots of vacancies in the NHS right now. Are you sure you couldn’t go for a job at a higher band? Where I work, we are promoting people quickly. The best way to sort your finances quick is to get a payrise.

It’s a terrible decision. If for nothing else because, as a pp said, if you die unexpectedly your family is knackered. Do you have enough life insurance to cover the shortfall? If not, that’s something that needs sorting tomorrow. Either through life insurance or opting back into your pension.

Don’t. I recently checked how much was in my pot after 10 years working and am appalled at how low it is.
I regret the big gap in my contributions massively.

This is an awful decision. You will massively massively regret this. 🙈

It's a really misguided course of action I think. I'd consider cutting anything rather than this.

Can you afford to pay into your pension?

If you genuinely can't afford it, then it sounds like you don't have much choice. It's worth looking at your finances in detail though and seeing where else you can make cuts first.

Otherwise, your partner should take the pension hit, since you have already done so on maternity leave.

Honestly it's a terrible decision. Ask for flexible hours or work a weekend day to save in one days nursery if you can

@pensionoptout

Thanks for the additional information. If I were in your shoes (and have been!)… I would continue with the pension. If a true emergency comes up between now and your other debts being paid then I would revisit the idea. But it doesn’t make a whole lot of sense to stop saving in one pot (which your pension is) to save for another pot which is likely to get swallowed up by life.

I know it’s hard especially when you are nearing the end of the tunnel on the debt pay down , but it’s a relatively short time to have to tread water.

Agree with others to see if there is anywhere else to find a little cushion in the time being.

You may also need to check if the NHS scheme lets you opt back in without a medical. I know the Police pension scheme requests a medical.

If you aren’t married, or if you already took a contributions gap due to maternity, definitely don’t do it.

Any bank shifts? Food or bills savings?

@pensionoptout

My partner is working as much overtime as he can. He hasn't opted out of his pension.

How come you’ve had to and not him. It should be an evenly split reduction if possible - or you do nine months and he does nine.

It’s not a great idea, but if it’s 9 months each it’s not the end of the world

Make sure you have registered for tax-free childcare. You are eligible if you are both working with no benefits. I didn't know about the scheme and missed out on about 800 pounds. I attempted a complaint but I was unsuccessful. www.childcarechoices.gov.uk/how-to-use-tax-free-childcare/

Apparently thousands of people don't know about the government scheme and don't claim as a result.

Check what the situation is if you died before you opt out

If you are likely to hit issues with lifetime allowance and or tapering opting out may be far less expensive than people think or even a money saver, but those circumstances would be unusual for those talking of banding.

Assuming no unusual circumstances I really would try and stay in if at all possible. Death in service is two times pensionable income not three times though if you are pricing up insuring that separately whilst opted out, assuming 2015 scheme.

I think your OH should be opting out if you're taking a cut in hours

This is a very short sighted Poor decision you have made