Receiving my NHS pension at 60

[Fernandez54]

I worked as a nurse for about 12 years, but for family reasons I gave up nursing, I paid into the NHS pension until I left. Fast forward to now, and I’m now 54 I work as a TA in a high school I also pay into that pension (6 years so far.)

I’ve recently logged into my NHS pension account to get a prediction, it states I will get it at age 60, a lump sum ( a big one or a smaller one my choice) and then a monthly amount.

Either way it’s not enough for me to fully retire so I will continue working full time as TA.

Is it better to get the larger lump sum and a reduced monthly payment or the smaller lump sum and a bigger monthly payment?

i know it’s 6 years off but I don’t know what to do?

any advice ?

That's is a very individual decision that nobody can make for you. There is no one simple answer as everyone has different circumstances. All you can do is look at the figures at the time and work out what is best for you.

Ok thank you just don’t know how it works with tax etc

It might be helpful to get a prediction for your other pension too.

For me, I expect to live a fair few years after 60 so I will probably get the larger monthly payment and the smaller lump sum. But I already have some savings.

As far as I understand it, your lump sum is likely to be tax free (assuming it’s under quarter of a million!!!) and you will pay income tax as normal on your total income, except the tax free personal allowance (the first £12k or so). But I am not an expert.

Thank you yes I’ve got a prediction for that too but don’t think I can get that at 60, it’s much less.

Yes I have savings too and I’m leaning towards the smaller lump sum, just wasn’t sure about the tax but your response is helpful

Please get advice about this as there are several types of NHS pension depending when you paid into it. And I am aware that there is one type where you get a lump sum at 60 and if you don't take it at 60 it effectively loses value. There is a really good Facebook group for NHS pensions which will help you get your head round it.

Thank you I will look up the group

Normally on the nhs pensions website you can put both options in even I think mess around with a sliding scale for the lump sum and see how much it affects the monthly payment. For me I will take the larger monthly payment because security of a larger fixed monthly income is more important to me. I don’t need a lump sum to pay anything off such as a mortgage. I wouldn’t blow a lump sum on a caravan or cruise. And I have savings I can dip into if needed.

@Fernandez54so many variables! I took a larger lump sum as my pension would have to grow like mad to make up the difference! Over many years. Plus I thought if I added it to our portfolio of investments it would do well. It has. But we are all different in terms of finances and needs.

Thank you I think it’s confused me as I get it at 60 and I will still be working, but for a different employer. I’m on my own but have savings as well. Anyway I have a few more years to mull it over.

Personally I’d say take the lump sum, as you don’t know how long you will live. You can always invest it, but then you can get at it whenever you want, unlike if you leave it in the pension.

I’m sure there’s a free service you can use for advice. Called something like PensionWise.

DS had to book an appointment with someone before he was allowed to do something with his, and DH did one because it was time. Neither were massively impressed, but they are already extremely clued up on such things (one is an accountant). It would probably have been helpful for someone like me.

Free impartial pension guidance here from the Money Helper website
www.moneyhelper.org.uk/en/pensions-and-retirement

Talk to Pensionwise. They are government backed and free. It is really important to get good advice about your specific circumstances. Pension Wise appointment options | MoneyHelper

I believe there’s some advice that says that if you’re likely to survive over 12 years then it’s beneficial to focus on the monthly income. You’ll have very little pension so I’d maximise the monthly income into retirement.
I worked part time and decided to take the lower lump sum and higher monthly amount as I wanted to feel able to reduce my hours of work as I head for state pension.
It is complicated for now in that you’ll be taxed on your pension. However one thing I hadn’t realised is how much affect the annual uprating / inflation increase has on my income. The pension is guaranteed money whereas work income isn’t and it’s nice to be able to plan for my old age knowing it’s there. If I’d taken a bigger lump sum I couldn’t have guaranteed it would retain its value even if invested.

You have always been taxed on private pension income if it’s over personal allowance. It was never untaxed. Some decisions need to be made in what you would do with the lump sum and what income that can generate. Or do you want to do home improvements. If income is only goal then take lower lump sum.

I will take my DB pension in 6 years. I will take 25% tax-free cash sum as I will need to fund house renovations.

Im sure the nhs does free pension seminars with a company they employ to tell you all about pensions. Have a google and see. They can make appointments with you too. Think it’s all free. I presume they get their money from you asking them to do stuff like investing for you

They probably do but I don’t work for the NHS anymore (at least 15 years) so don’t think that would be something I could access. I’m on my own now and have no clue about stuff like this. My ex husband was good at this sort of thing, and probably has a huge pension pot by now, so I’m trying to do the best option.

A larger lump sum is usually useful if you have a mortgage to pay off or want to take a special holiday, otherwise if a regular income is important a smaller lump sum may be more beneficial.

Phone hr and ask them. It’s all free. You don’t have to still be staff.

You should also factor in the tax implications.
Taking the larger pension plus your current earnings might push you into the 40% tax bracket on your combined income, while all of the lump sum is tax free.

I’m considering taking the lower pension and higher lump sum. When taking tax into consideration I need to live 15 years to recoup the difference, by which time my state pension will have kicked in. If I don’t live for 15 years the lump sum is in the bank to be left to whoever I decide. If you have a partner they get 50% of your pension for
life. If you don’t have a partner then your pension dies with you and you can’t leave it to any adult children.

As taking the lower monthly pension puts my income just slightly above the tax free allowance I will pay vey little tax but can draw down from the lump sum to top up my income. I will put what I can into ISAs for as long as RR doesn’t mess with the amount.
As my actual income from pension is low and ISA interest doesn’t count for tax purposes I also benifit from the starter rate for tax on interest meaning the interest on non ISA-savings is tax free up to £5,000.

You might also benefit from a warm homes grant for things like insulation and solar panels if total combined income is under £35,000, so worth considering if the higher pension might make you ineligible.

its a vey individual decision with lots to consider depending on your personal circumstances.

As you can see I’ve given it a lot of thought.

I looked at the lump sum offered vs pension amount and then worked out how many years I needed to live to get best value either way. You then make the best decision with that information.

I decided to take the bigger lump sum and smaller pension.

Feeling stupid here as I had no idea NHS pensions were subject to tax!
The government are trying to up the pension age another year so I won't get mine until I'm 68. Another 15 years to go and I won't be able to afford to retire on my NHS pension alone as I've only been paying into it for a few years and am on a low pay scale. So yeah, happy days!

You'll get your state pension as well, have a check of if you are due the full amount of that. I agree 67/68 to get it feels a push, some days I'm not sure i'll get there!

even though you don't work for the nhs you are still a member of the pension scheme having paid in, so you can access advice from the nhsba (business authority)