Extra contributions to NHS pension

[hooplahoop]

Hi, i have seen some people suggest paying extra into a NHS pension ( to avoid losing child benefit etc ) but my understanding is the NHS pension is a direct benefit/ career average - so how do extra contributions benefit ? Thanks

One option is to set up a separate SIPP. That’s useful because it’s much more flexible than the NHS pension. Eg if you want to retire early you can use the SIPP to bridge the gap between when you stop working and when you can take the NHS pension without penalty.

That sounds good -will look into it. At this rate the nhs won’t be letting me retire before 70!!

If you’re in NHSS I can send you lots of info - I’ve just asked the same thing of the SPPA.

Thanks Sir - is that NHS Scotland ? I am in England unfortunately

You can buy additional pension, calculators are on the NHSBSA website and also pay into a separate scheme

Is the nhs pension a good one?

Yes, Scotland - I don’t know what the equivalent agency is in England, sorry, but hopefully they’ll have a similar portal that you can post queries to.

I believe it is seen as a good scheme -but it was explained to me that my monthly contributions are more like a membership fee rather than impacting on the pension amount ( which Is based on career average) so still a bit confused how paying extra per month would help ?

yes, your standard contributions will give you 1/57th of your salary as an annual pension. You can buy additional annual pension in lots of £250 per year up to a maximum of £6.5 or £7k per year. There are calculators on the membership website that tell you how much it will cost as it depends over how many years you want to spread it.

thanks messy, but what is the benefit of putting more in the pension pot as opposed to a savings account ? The employer does not put more in, so how does it help?

It buys you an increased pension. So £250-£6k extra pension a year costs a certain amount over x years.

A pension is basically a long-term savings plan with tax relief. Getting tax relief on pensions means some of your money that would have gone to the government as tax goes into your pension instead.

You're buying extra "years" - your final pension is based on a calculation based on a portion of your (likely average unless you've been in the scheme for a long time) salary x number of years contributing. Your extra payments can increase that multiplier.

That makes a lot more sense now - thanks all. I think when I looked at the calculator before I was surprised little the new amount seemed adding extra added to the pot/ ‘years ‘ ( but that might be because I’d my age ) but the tax relief is a good example - although i think if I add more in than my career average pension may be less as my net salary will
be less. I’ll call the pension service next week .

Your career average pension is based on your gross pay, not net, so you won’t reduce that at all by paying in more.

One other thing to think about is that if you stop working a few years before you reach NHS pension age then you won’t be using up your personal tax allowance. If you pay into a SIPP for those years then you’ll get the tax added when you put it in, and when you take it out you won’t have to pay tax on anything below the personal allowance. So your money will be worth considerably more than if you just left it in savings.

I know trust this thread is old but I've just come across it while searching for the benefits of paying extra into my pension. Would you please be able to send me the info you have? I'd be very grateful as I can't make head nor tail of the whole pensions thing.

@SirChenjins i was just about to say the same as@BubbleBubbleBubbleBubblePop . Could you send me the info also? Just came across this thread this morning x

If you set up a personal pension outside of your work place pension you can valid back an additional 20% via self assessment.