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?

All those saying it's just for a year or two...you run the risk of never going back intl the scheme because you flex to your salary.

Don't do it OP. Someone I know sold their house to go into rented for 2 years....20 years later they're still in rented.

I have seen too many friends die before retirement.
It is a balance.
If you have some money - some in pension and some for fun.
If you are living hand to mouth then enjoy today and prioritise fun.

Band 5 is £28k. So one year of full time working is £519 pension, and 3 years of working would be £1558. Unless you have been both very part time and on a much lower salary for much of your 10 years I don't see how it can be so low.

It’s very short sighted to opt out of a pension like yours for extra spending money. It’s one of the reasons why less well off people often remain that way.

While you’re having fun days out, your colleagues will be accumulating excellent pensions, perhaps enabling them to retire early. You’ll end up working into old age because you can’t afford to retire.

You need to be clear on what is Defined Benefit and what is defined contribution though.

For a DB scheme what the employer contributes is largely irrelevant - it's how much pension per year as proportion of your salary you build up that matters.

For the latest university scheme that is 1/75. Not bad at all but nowhere near as good as 1/54 in the NHS. Local government is 1/49.

Most private sector is a contribution to a dc scheme

@FrownedUpon Low paid staff do not get enough pension to retire early. It is to top up state pension.
Living with no fun money is bloody miserable. You will not do it.

@PosiePerkinPootleFlump about 50/50. Worked full time for about 5 years and 16 hours the rest. (Childcare)
I'm part of the 2008 scheme too and believe that adds another £500 PA.

Band 5 goes up to £34581

Personally I wouldn’t, but now I’m I my fifties and believe me it’s a surprise how quickly that happens! Seems like yesterday that I was in my thirties, and to be heading towards retirement with no private pension would scare me, the state pension will not exactly give you a rich retirement. You could find the difference of not having your NHS pension means you can’t afford to put the heating on…is that the retirement you want?

I suggest you sit down and write an honest budget. Is the father of your child contributing? Are you getting all benefits you may be entitled to? I don’t mean tell us on this forum, I mean check it all out, there are benefit calculators online to use and check.

If you die before retirement in a DB scheme your beneficiaries will typically receive a lump sum that is a multiple (usually three) of your salary at death. Then they can typically also receive a pension that is based on your salary at date of death, assuming you worked until your retirement date.

The possibility of death before retirement is one of the strongest arguments for remaining in the scheme.

Incase anyone didn't know that unless married you have to opt in for the death in service benefit.

One of my direct reports opted out when she had her second DC.
She bitterly regrets it, especially as her peers began to reduce hours/roles once they could.
She’s 58, knackered and has just had a cancer diagnosis. I’m sure she wishes she could turn the clock back as she was in the 1995 scheme so could have gone at 55.

all the people that I know who have opted out have regretted it massively. Don’t do it.

Going against the grain here... it's not ideal to opt out at all. However, I have an NHS pension and I opted out for one year when my first child was tiny and we were saving for a home. Then I opted back in as a priority. It is allowed and you can do it! If you're considered about it, it could be the right short-term choice for you and your family.

This isn't true

Someone else said 12% and someone else said 13.5%.

Can anyone confirm what it is? Or does it vary?

Apples and oranges, surely?

You’d be crazy too. I’ve got a civil service pension and the only person I know to opt out stands to inherit over a million pounds

It doesn’t matter, what matters is the 1/54 th of you salary that is added.

and another poster asked how to know what her pension was currently predicted to be, I think you can look this up on ESR, under Total Rewards section

@Goodlard it's 100% true in my trust at least. Perhaps different parts of the UK have different rules? I'm not in England.

@mottytotty it varies, I’m on a weird contract. What I do know is that it’s very favourable compared to my 3% employer contribution that I used to get in the private sector.

Is that just the NHS contribution, 1/54? And that the employee contribution is separate?

And yes as another posted said, death in service is generally 3 x your salary and this won’t be payable if you opt out. God forbid it would happen but you’d be denying your daughter / her carers a lump sum to care for her in exchange for some days out.

I don't agree. My point is that something always comes up, particularly once youve had children. Retirement seems far off and once you're used to the money in your pocket you may very well not go back into the scheme.

And then bam, you're 65 with no hope of retiring imminently.

Thanks, what is their contribution in your case? A rough view would be useful, I realise it may be confidential.