Advice on NHS pension

[Hoardasauruskaren]

I started working there in 2015 and will have 24 years service when I retire (assuming I work till state pension age) I worry that my pension will not be enough. My current statement says my pension is £7000 ish pa. Is that based on what I have paid in so far? So will increase each year that I pay in? It talks about an accrual rate of 1/54, can anyone tell what that means? Would be grateful for any info / advice. I find it all a bit confusing!

So the accrual rate of 1/54 means that for every year you get 1/54 of your salary to your annual pension. So if you earn £40,000 you would get £740 added to your annual pension. Of course your salary will (hopefully) increase in time and so the amount that goes into your pension each year will increase, as the accrual rate will always be based on your salary for that year (pre 2015 pension was based on final salary) also the amount in your pension increases by
either cpi or rpi (can't remember which) so it keeps up with the cost if living. It's a great pension - if you will have 24 years service you should be fine. Don't forget you should have your state pension on top.

@Earlystartsmakemegrumpy gives a great explanation of the 2015 scheme. Remember you also get death in service benefit with your pension of twice your annual salary. You can take the pension from 55 soon to be 57 years old but your pension would be reduced. For example if you took your pension at 60, you would currently get 71.1% of its overall value. It’s a great scheme guaranteeing you an income for life. Don’t come out of it! Maybe start a separate SIPP to use as an income prior to state pension age or look into the cost of ERRBO via the NHS pension scheme.

I thought I can’t take it till state pension age? As I only joined in 2015?
I’ve no intention of leaving it, don’t worry!

Join the nhs pensions (pen-gage) on Facebook. Its brilliant!

So the accrual rate of 1/54 means that for every year you get 1/54 of your salary to your annual pension. So if you earn £40,000 you would get £740 added to your annual pension

Does that mean if its £740 for the whole 24 years my pension would be 24 x £740 = £17,760? Obv my salary hasn’t been the same every year but just as an example. If it was around that figure that would be fine !

Yes. You are accruing 1 /54th of your salary each year. These are all added together and will also increase with inflation. The figure the pp gave was just based on a £40,000 salary obviously you would get 1/54 of whatever the salary was that year.

Crikey. None of that means anything at all to me. I do not understand any of it.

With the type of pension op has every year that she pays in means that she gets an amount added to her pension. This is 1 / 54th of her salary so if she earns £40,000 this year £740 will be accrued. That will carry on every year she works and pays in to the NHS pension. Obviously the amount will increase each year as her salary rises. Basically you are just adding up the number of years accrued. Let's say for easiness that she works for NHS for 10 years and her wage hever changed. She would have accrued 10 x £740 = £7400.00 which would be the amount she would receive every year as a pension until she dies.
Obviously her wage will go up and the accrued years money will rise with inflation.
This only applies to defined benefit schemes, usually these are NHS, local government, civil service, teacher.
Most other jobs would be defined contribution which builds an actual pot of money which can be used to either purchase an annuity or to drawdown while leaving the majority invested to continue to grow.

At state pension age you take it in its entirety without a reduction. You can take it earlier, currently 55, but you get less per month because you’ll have it for a longer time. Depends how jaded you get with the NHS or what comes your way with age I guess.

Pengage is great, there are free webinars on you tube too.