Opting out of NHS pension

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Im early 30s single mother. At the end of the month I have no money left, better than being on minus I suppose. Im thinking of opting out of pension (£350 a month) to live a little. Would take my LO to do some travelling, days out etc.
I would do it maybe for a year or two. I feel like Im not living but just existing. Anybody else has done it?

For simplicity’s sake I will assume that you are on the 2015 pension scheme only.

If you had been a band 5 full-time for 10 years then your average income for each of those years (on the lowest band 5 pay) would be £28407. I know that 10 years ago your actually £income would be lower but it is inflation adjusted each year and so actually in today’s money your income 10 years ago was better. Accrual in the 2015 scheme is 1/54 of your annual income (regardless of whether you are making 5% contributions as one of the lowest earners or 13.5% as one of the highest earner).

Therefore based on a full-time band 5 income for the last 10 years, your annual income at age 68, if you didn’t work another day in your life from now, would be £5185/year (28507 / 54 x 10). If you were part time then it would be proportionally less (I.e. if you were 50% for the last 10 years then your pension would be £2592/year).

After full-time work for 30 years as a band 5 on the 2015 scheme only, your final pension at age 68 would be at least £15387.

If that does not fit with your current projections on the NHS pension login then you need to gather previous payslips and urgently contact them to inform then, as it sounds like they’re missing many of your pension contributions.

I'd echo the comments of previous posters, but also to tell you that aged 35 I became very ill and ended up retiring on ill health grounds (im also a single parent) the thing that has helped keep a roof over our heads and food on the table is my nhs pension. If id have opted out id have got much less and a lower tier pension. I'd never advise anyone to opt out of a pension (it's not just there for when your elderly). You don't know what the future holds so definitely wouldn't advice short term gain in favour of long-term gain. I'd look at how you can cut costs in other areas.

I have just taken my NHS pension. With the recent increases due to high inflation it is considerably more than I had planned for. Being index linked means that it really does increase in line with inflation.
Private pensions are reliant on currently volatile markets so have not done well.
NHS pension really is worth the investment.

I did, I opted out to help pay nursery fees and to enable me to work part time when my DD was small. I don't regret it in the slightest.

I really really wouldn't as you will regret it when you reach pension age

I work for the NHS and have a similar amount going out each month so I totally understand but please do not do this. As someone else has said the £350 is taken before tax etc so you wouldn't be £350 better off if you opted out, it might be closer to £200. I'm not sure what age your LO is but if you're paying for childcare then that amount will decrease eventually (I know this was crippling for me until my DD turned 3 recently). Maybe even the economy will get better and the COL crisis will bugger off....!? Hang on in there.

Remember that your nhs pension includes

• death in service cover
• options for medical retirement

It's easy to opt out thinking it will just be for a limited period. It's far harder to get round to rejoining.

Personally, I wouldn't leave the scheme unless it was the last option. I certainly wouldn't leave so I could afford holidays

Don't opt out. Even though it has been watered down, the NHS pension is still a good one.

It’s too valuable to do it for the reasons you’ve given.

No-one says “LO” for older children, so I’m guessing she’s under 7, and more likely under 5. In which case, she won’t remember much about the days out in years to come - and the fun and value (stimulation, time with you) she’ll get from them is exactly the same whether it’s a free day at the beach or Disneyland.

So it’s just not worth the eventual pension loss for the short term gain.

I hope your disposable income improves - push yourself for promotion if you can, and if your child is really little, maybe you have less childcare needs in a few years.

I actually think it can be worth giving up some pension for living now. I mean, doesn’t everyone who books a holiday do that? Because they could be making an extra pension contribution.

I think if you looked at hard figure and chose to give up £x for life aged 65+ for one big holiday with a 12yo who’ll remember it… then that could be a valid decision. But I don’t think you’ve looked at the long term impact, and for me personally- I don’t think the balance is worth it.

As a single parent I also opted out of my nhs pension . I needed the money to live now - not in the future .
Everyone who says don’t opt out probably has a contributing partner or less debt etc

I might regret it in the future but needs must and with being sole earner I need the money now to pay my bills .

Same reason I'm currently opted out. I'll rejoin when she gets her free hours later this year.

It would be absolute lunacy to opt out in this situation. And I say that as a single parent in a similar pension scheme.

“Everyone who says don’t opt out probably has a contributing partner or less debt etc”

No, everyone who says don’t opt out can see a difference in the OP’s situation (no extras) and your (needs it to pay bills)

Don't do it! You won't get £350 in your pocket as you'll pay tax and NI on the amount. Try everything else before you do this.

I need to work my nhs pension out. How can I do it ( and make it look this simple??)

University is better- they contribute 18% of salary before tax.

Most private employers contribute 3%.

If NHS is 12% it's better than most places.

I feel as if most of the replies ignored OP saying "for a year or two".

Presumably the concern is the pension might not be as good in a year or two when OP opts back in?

She's not saying it's forever.

Don't do it!!! For all the above reasons.

You have to enjoy your actual life here and now. You could die before you reach retirement age.

Well, it's still a big loss overall, due to the very large employer contribution. And I suppose there's a risk the scheme might change in the interim as well.

NHS employer contribution is 20.6% in total.

Personally I wouldn’t do it. I know that it could seem a good way of gaining additional income but your older self won’t thank you for doing it. NHS pension is one of the better ones around

People telling you not to do it are probably better off than you OP. It is bloody depressing having zero money to enjoy yourself. Today also matters.

I used to think like that.

Till I got to retirement...

I wish we'd prepared better.

@TwoUnderTwitTwoo thank you that's very useful to know. I still have another 30ish years so hopefully a lot better than my predicted £1606!