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?

Employee is based on their salary. Starts at 5.? and goes up to 13.7 % but as someone else said it bears no resemblance to what you get.

Contribution amounts are irrelevant as it’s a DB scheme.
Do not opt out!

I'm with the others. Don't do it. You will regret it when you come to retire!!

I have been in the NHS full time since 1995. I simply don’t understand the details of pensions. I have asked so many financial advisors but I still don’t understand it fully. I think my brain is not wired to really understand this.

Does anyone have recommendations for an idiots guide? Anything I read I am confused after the first few lines. I have a decent brain but a mental block on financial terms. Stuff like ‘defined benefit’, ‘assured’ means nothing to me. Add in nhs complexities and different schemes and I am lost.

I don’t think (I hope anyway) that I am alone in this.

Regardless of how good the pension scheme is, having no money at the end of your month is rubbish. Especially if you’re a single parent. Weigh up the pros and cons

This thread has been a head shake for me, I'm going back to the NHS and had forgotten the pension contributions were so much and considered opting out. I won't now.

Honest to god i can't think of anything more stupid than opting out of a defined benefit pension scheme worth so much.

Most people would kill to have access to those pension schemes.

I paid a pittance during my nurse training in the 70's. When I left (just married and baby on the way) I reclaimed what I had paid. £80 was a weeks wages back then.
Later, in my 50s, I worked again for the NHS. I am now, late 60s, in receipt of my pension. That £80 would probably have doubled my current pension (10 x the NHS part of it). So, so short sighted and one of my few real regrets. (Done lots of stupid things but not much I regret like this)

Honestly op, i am a high earner and am putting something daft like £1400 a month in pension and it won't buy me an annuity like you'll get from an nhs db scheme. You get so so much value from them.

Thanks. So strange that it doesn’t bear resemblance to what you get.

Why do the have both the contribution scheme and the 1/54th of salary thing?

I was just reading this

https://www.wesleyan.co.uk/pensions-and-retirement/nhs-pension/guide

Someone else who works in the NHS may have a better suggestion.

i have a teacher pension so similar to the NHS. I have come out of it previously for the same reasons you are thinking.i should have 6 years but have three instead due to a year out of work and two years out of pension, based on my current forecast I would get £4,000 less than I earn (this doesn’t take into account moving up pay scales).

I knew that I would lose out on some pension and the death in service benefit at the time. Personally for me it was the right thing to do at that time but only because I have a life insurance policy that would have paid out if I died during my pension time out. Do I regret it? Not really as for me it made the most sense at the time.

look at your forecast, take life insurance if you don’t already have it. Work out can you afford not to be in it temporarily

Thanks a lot. I will take a look.

Does your age not come into it?

EG if you are now late 50s then some of your pension is likely to be final salary, whereas a single mum with a baby (perhaps in her early 30s) is more likely to have no final salary years in a pension...this will make a big difference.

It's because basically what you are paying each month is funding the pensions that are being paid out today. It isn't like where you create a pot of money and buy an annuity or drawdown a lump sum when you retire.

Contribution is what you contribute to the scheme but the 1/54 is the career average scheme where your pension is calculated over the years.

I retired in August so what you are paying in just now is paying me 🤣.

Also what you pay in is not your pension input amount....the maximum you can put into a pension in a year was £40k and is now £60k but NHS pension inputs are calculated on the value of your pension at one point one year and then the same point the next year and is affected by inflation/CPI this means that for the higher earners we can end up looking as if we have put huge amounts into our pensions so we are therefore taxed for putting too much in. I was looking at a tax charge of £20k because inflation meant it looked like I had put £80k into my pension.

Fortunately the dates changed so escaped that i think! This is why doctors restrict their hours as by earning more they end up with punitive tax bills. However as a pensions advisor said to me .... because of inflation my expected pension went up by 10%!

@Musicaltheatremum thanks that makes a lot of sense. Would you be able to say (roughly) how much you earned on average throughout your career and what pension you get now? No worries if not, I know it’s very personal.

As @TwoUnderTwitTwoo says it is almost certainly better than you think.

Firstly, it is not a 'prediction' - as in what you will actually get at retirement if you keep working for the NHS until retirement. It is a 'to date' amount - what you will get at retirement if you leave the NHS (or opt out of the pension) today and don't pay in a other penny.

And secondly if it's only showing as 1600 after 10 years at band 5 there are 3 options.

1. your TRS is wrong, and you need to follow up, find the error and get it corrected.

2. you were part time (and very short hours) for almost all of the 10 years

Or 3) you're not looking at both parts. Starting 10 years ago, you will have some pension in the 2008 part and some in the 2015. These are shown on separate pages on the TRS, so are you sure you've checked both and added them together?

(Or option 4 you're reading it completely wrong and looking at the lump sum or dependant pension, or something else that isn't actually your annual pension.)

You will really wish you hadn't in 20 years time and age creeping up on you, probably with a worse state pension than it is now.

It will yes but as I’m 31 so similar age to OP

Don't opt out!
My good teacher's pension allowed me to retire at 55 and keep my sanity!
I know it must be tempting but don't do it!

As an early 30s single mum also in the NHS, don't do it! The NHS pension is fantastic. They will significantly reduce the benefits of it in our life time and you do not want your lose a handful of years in the current scheme. People were up in arms about the changes in the 2015 version to 2008 one, and yet the 2015 one is still great by most pension standards.

It's not worth losing the death in service benefit, and if you pay £350 in a month it won't be £350 extra in your pocket if you opt out. He major risk is that as a single parent you'll never be able to feel the loss of opting back in.

These NHS employer contributions sound great!

I work in the private sector and my employer only contributes c.8%.

I shamefully ignored my pension pot for years i.e. only contributed the minimum 6% for years.

I upped my contribution to 22% last year, and am seeing projected pot increase.

I would definitely prioritise the pension.

As pp said, let us help where else you could cut back.

NHS pension inputs are calculated on the value of your pension at one point one year and then the same point the next year and is affected by inflation/CPI this means that for the higher earners we can end up looking as if we have put huge amounts into our pension

That changed in 2022 - inflation is now ignored in the pension input calculation.

I think would be v foolish, especially to fund holidays (not essentials)

@FridayButterfly and anyone else wondering about NHS pensions...I'm talking 2015 onwards really but I believe the older ones were the same principle of defined benefit just more generous to it the age you could go at etc.

Most pensions are defined contribution. You pay an amount in, so does your employer. This is invested somewhere and hopefully grows. It can go up, it can go down.

The NHS pension is defined BENEFIT. There is no pot of money we are putting into. People working in the NHS now are effectively paying the pensions of retired NHS employees with our monthly pension charges which are based on our salary. Our monthly pension contributions are effectively a monthly charge to access our retirement benefits which are already defined based on our career average earnings ie. 1/54 of salary per year.

NHS pensions are hard to understand because defined benefit is so very rare now. It's being DB that makes the NHS gold plated. We never have to worry about the economy tanking and our pension fund taking a battering - our pensions are guaranteed by the government come what may.

As a single mum in my early 30s, my odds of leaving the NHS are minuscule. I'd get paid a lot more in cash terms in the private sector for what I do, but the flexibility, annual leave and pension would be so much worse.