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Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

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

239 replies

pensionoptout · 06/02/2022 16:22

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? Confused

OP posts:
Original poster
pensionoptout · 06/02/2022 19:52

[quote PickledOnionSandwich]@pensionoptout If you go onto ESR, you can check which pension scheme you’re in. You can also see if different parts of your pension are in different schemes.[/quote]
Thank you

OP posts:
StripeyDeckchair · 06/02/2022 19:57

This is probably the single worst decision you can make. Opt back in now before you get too used to the additional £

AllOfUsAreDead · 06/02/2022 20:02

I would opt back in if I were you and get a loan or credit card for emergencies instead.

It's amazing how many people I know though that have opted out of pensions. Mostly men though. But still I find it mad. They claim there is no point and saving money is better, but I don't believe that to be honest. Considering you get input from the company too, you'd have to save more than you would put into a pension, reducing the amount you earn each month.

But meh not my circus.

babyjellyfish · 06/02/2022 20:03

I would do absolutely anything you can to avoid this. You will regret it later.

babyjellyfish · 06/02/2022 20:07

I've only read your posts OP so don't know if anyone else has already mentioned this.

But don't forget that you will be losing your employer's contribution too.

So say you normally pay £100 into your pension and you have temporarily stopped. It's not as simple as not saving £100 for your retirement so you can have £100 now. Because if your employer is also contributing £100, you're not saving £200 for your retirement in order to have £100 now.

Plus the loss of the death in service benefit, and the fact that you're not married. I really would find a way to save money elsewhere and opt back in ASAP.

Kpo58 · 06/02/2022 20:10

Which public sector scheme is your DP in? If it's the LGPS, he could go into the 50/50 scheme temporary where he pays in half his contributions.

Polkadotties · 06/02/2022 20:13

@babyjellyfish

I've only read your posts OP so don't know if anyone else has already mentioned this.

But don't forget that you will be losing your employer's contribution too.

So say you normally pay £100 into your pension and you have temporarily stopped. It's not as simple as not saving £100 for your retirement so you can have £100 now. Because if your employer is also contributing £100, you're not saving £200 for your retirement in order to have £100 now.

Plus the loss of the death in service benefit, and the fact that you're not married. I really would find a way to save money elsewhere and opt back in ASAP.

This is not how the NHS pension scheme works.
FingersofFish · 06/02/2022 20:13

I have a public sector pension and whilst they're not what they used to be I got some financial advice about doing the same a while ago and the advice was that it wasnt a great idea as they are still better than private pensions and topping up in the future is limited. Could you each apply to reduce a day of work so you have 2 days less childcare a week? My partner became a SAHP in the end as their salaery was equal to childcare and I was the higher earlier.

PrincessNutella · 06/02/2022 20:15

No, no, no, my friend. Be a friend to future you. You CAN NOT afford not to save for your pension. Trust this old lady on this point.

babyjellyfish · 06/02/2022 20:18

This is not how the NHS pension scheme works.

Why? Does the employer contribute the same amount whether the employee contributes or not?

Rainbowshit · 06/02/2022 20:21

You're not married and your the one taking the financial pensions hit. 🙈🙈🙈🙈🙈🙈🙈🙈🙈🙈🙈🙈

Polkadotties · 06/02/2022 20:22

@babyjellyfish

This is not how the NHS pension scheme works.

Why? Does the employer contribute the same amount whether the employee contributes or not?

The NHS pension scheme is not a defined contrition scheme. The benefits are accrued based on the member’s pensionable pay and the accrual rate. The contributions paid in are irrelevant
babyjellyfish · 06/02/2022 20:24

The NHS pension scheme is not a defined contrition scheme. The benefits are accrued based on the member’s pensionable pay and the accrual rate. The contributions paid in are irrelevant.

I used to be in the civil service so I was a member of a defined benefit scheme. There were definitely both employee and employer contributions, and I'd have lost the employer contributions if I'd stopped my own.

wonderwomen1 · 06/02/2022 20:28

I'm going to go against what everyone else says and say do what ever you can to make living more comfortable now.

I'm nhs and I remember the childcare costs so I opted out of pension and started again once they started school. I'll still have over 30 years paying in when I retire.

Might sound depressing but you never know what's around the corner, why struggle now

Polkadotties · 06/02/2022 20:30

@babyjellyfish

The NHS pension scheme is not a defined contrition scheme. The benefits are accrued based on the member’s pensionable pay and the accrual rate. The contributions paid in are irrelevant.

I used to be in the civil service so I was a member of a defined benefit scheme. There were definitely both employee and employer contributions, and I'd have lost the employer contributions if I'd stopped my own.

Defined benefit is based on service and final pensionable pay. Not contributions paid.
Polkadotties · 06/02/2022 20:32
  • pressed post to soon

The only schemes which are contribution dependent are defined contribution schemes and schemes like SIPPS

kitcat15 · 06/02/2022 20:32

@wonderwomen1

I'm going to go against what everyone else says and say do what ever you can to make living more comfortable now.

I'm nhs and I remember the childcare costs so I opted out of pension and started again once they started school. I'll still have over 30 years paying in when I retire.

Might sound depressing but you never know what's around the corner, why struggle now

She will struggle big time if she has a serious illness and needs to take ill health pension....but I guess some people are just risk takers
babyjellyfish · 06/02/2022 20:35

Defined benefit is based on service and final pensionable pay. Not contributions paid.

Yes, I know what defined benefit means.

The point is that in order to get that benefit, both the employee and the employer pay into the scheme.

The employer contributions are part of your overall salary and benefits package. But if you don't pay the employee contributions, you don't get them. You can't take those contributions as extra salary instead. It's use it or lose it.

So by not contributing to the pension scheme, the OP loses the employer contributions which are part of her salary and benefits package.

LoudSnoringDog · 06/02/2022 20:35

I asked a financial advisor about coming out of the nhs pension when I was pregnant with Dd. I intended to explore just coming out for 3 years.

He asked me if I was insane and advised me to try and cut my cloth elsewhere but not my pension. Just three years out would be a huge impact on my pension allowance. Glad I listened to him. Will never forget the incredulous look on his face.

loislovesstewie · 06/02/2022 20:38

But you have to actually pay into the scheme to get the pension, don't you? So if you opt out for a few years then, logically, you will have fewer years of service. So, if it's like local government schemes, instead of being 40 years you might have 32 which makes quite a difference.

Dishwashersaurous · 06/02/2022 20:41

Honestly with a DB pension the employer contributions are so high its always worth it.

It's just better to think of the pension contributions as not yours, but rather like tax etc. Your income is yours after pension contributions.

Hillarious · 06/02/2022 20:42

Don't even think about pension contributions as being accessible funds. Look elsewhere to make savings for 18 months, rather than stopping the pension contributions.

Crimesean · 06/02/2022 20:43

Please, please don't do this. It would be utterly foolhardy. If, as you say, you're likely to get promoted withim a few years you should hang in there and wait it out.

You are very unlikely to get anywhere close to an average salary pension elsewhere. Don't squander it now, you will get used to the extra income and never feel like you can afford to opt back in. And your DP will be grand, as since you're not married you'll have no claim on his pension and no more than 50% of the house, even if you pay lots more in.

Zilla1 · 06/02/2022 20:48

HNRTT but in line with the above post, what other benefits will you potentially risk, OP, beyond the years lost which might not be the most material depending on your ultimate length of service. Ill-health, death in service and so on?

AnneElliott · 06/02/2022 20:52

I agree with everyone else op - don't do this unless there is literally no other option. I agree a loan for the childcare would be a better option.

What scheme is your DP in? And being unmarried you are taking a risk.