Nhs pension - linked to state pension - putting me off

[olivehater]

I have an nhs pension. The new pension is linked to state pension ages which concerns me as the state pension age can be changed at any time. How can something I have already paid into alter at the final hour. I have money to invest in further additional pension But not sure whether I should put more money into this.
I have also heard it may yet change back as the police and fire services has.
Can anyone shed any further light? I can’t seem to get anyone in my trust to give me any kind of explanation.

Unfortunately that's just the way it goes with most pension schemes, any scheme, private or employer or owned, will likely reserve the right to 'close' the scheme you are currently paying into and start up a new one with new rules. The benefits you accrued under the 1995 and 2008 schemes are still there on the same terms as when you paid in, you don't 'lose' them, unless you want to transfer everything into the new scheme of course, but in order for the NHS to continue to afford the (still very good) pension scheme they have, something needs to give as the old scheme was proven not to be affordable and this is the fairest way. The alternative would be to leave all existing staff on the 'old', 'better' scheme for life and then make new people start on the new scheme but to make that work the new scheme would have to be much much cheaper and/or have much higher employee contributions to make the pension bill overall affordable, and you'd end up with an unhelpful tiering system with people doing the same job but getting very different benefits, not very fair or good for employee relations. I would expect the NHS scheme will probably change again, about every 10-15 years is average so depending on how long you have to go until retirement then you may well see another change - but you get loads of notice of these things (and as I say you are still entitled to whatever you'd accrued on the old scheme plus the union usually negotiate a period of protection for staff close to retirement age), so it's not as though anyone on the verge of retirement would get the rug suddenly pulled from under their feet or anything.

As to whether it's worth your while continuing in the new scheme and what to do with your additional contributions, you'd need to take some independent financial advice, it will depend on so many things to do with your income, age, tax status, plans for the future etc etc. Your trust won't be able to advise you on that, you'll need to pay for it, but it will probably be worth it particularly if you are old enough to need to start proper retirement financial planning. But I will say that I'd be very surprised if you can find a private scheme as good as the NHS one with the employer contributions taken into account, even after the 2015 changes!

I understand that they can close schemes and start new schemes but the portion you have paid In thus far is protected.
So I have a protected portion in the older schemes which is great.
However , Under the new scheme if it is Linked to state pension age what you have paid in won’t be protected at all. If the government suddenly raises the pension age a year before I am due to get it I will be delayed or my over all payout will be reduced. That is how I am interpreting it.

With a defined benefit scheme you are not paying in to a pot of money from which you later withdraw. You are paying for the pensions of existing members drawing their pension.

So you are reliant on generations to come to pay your pension when it comes time you withdraw.

Nothing to stop you maxing out your ISA.allowance (currently £20,000 annual) each year and having a personal pension or SIPP (with pensions there are max contribution amounts and lifetime contribution maximum).

Pragmatically, it's highly unlikely that the pension age would raise with short notice. A government who did that would not get re-elected for the foreseeable future.
Obviously you can never say never, but your pension arrangements are far more certain than most people's!

You give up your employers contributions too, very very bad idea.

With a defined benefit scheme you are not paying in to a pot of money from which you later withdraw. You are paying for the pensions of existing members drawing their pension*

That is so wrong I can’t begin to explain

Why is it wrong @Panicovereveryone? Isn’t that broadly how it works, except that it’s invested along with everyone else’s,and current pensioners are paid from the same fund?

No it’s not how nearly every Defined Benefit pensions works. They must have enough assets set aside to cover ALL existing liabilities. If no one joins, if no one pays another bean, the money is there already. There is legislation to prescribe how this is calculated and a pensions regulator to ensure it happens. There are set reviews and actions put in place to rectify when funds fall short. There is even a fund to pick up the pieces when it goes wrong.

Now I grant you that SOME government schemes are unfunded (there is no pot) but to suggest that all DB pensions are funded by current members is total bollocks.

You are paying for the pensions of existing members drawing their pension

It’s that particular bit I take issue with

Most DB schemes have massive deficits which organisations are having to cover @youhedge it's an absolute mess.

That’s a different matter. Over promising and paying from current profits which could go to current workers is a huge issue. ‘Most’ don’t have huge deficits either. Many have plans in place, but there are some big schemes that are indeed underfunded.

Thanks - that’s a good explanation.

OP the case regarding fire fighters etc. is McCloud. nipsa.org.uk/attachments/article/458/The%20McCloud%20Judgement%20-%20Joint%20Statement%20-%20January%202020.pdf Without knowing your personal situation all I can say is watch developments which will take years.

In relation to your current pension scheme and Normal Pension Age, public sector schemes now link to state pension age so can move. However, there are two options to mitigate:

1. Actuarial reduction where your pension is reduced for taking it early. This can on an initial glance seem a big drop in pension but when you do a comparison of what you actually receive by say age 80 you can find the difference is negligible.
2. The ability to pay extra contributions to have the current years pension paid in full 1, 2 or 3 years early but no earlier than age 65.

There will be a website for you NHS pension which can help with your particular situation.

I was in the same position as you 3 years ago - with money in both NHS pension schemes and wanting to make additional payments. I decided to open a SIPP as it gives you more flexibility than additional payments to the NHS 2015 scheme. I can access it from the age of 55 and take out as much or as little as I want, when I want. (There are upper limits but they’re too high to bother me.)

So eg you can retire at 60, take one of the NHS pensions and the lump sum, top it up with money from the SIPP which only has to last until you reach state pension age. Then at state pension age take the other NHS pension plus state pension.

Bumping as I too have an NHS pension as above.

I'm in team @ScarletAnemone with the same gameplan.