early retirement on 1995 section NHS pension

[Mybestyear]

Hi everyone. Thinking of retiring at 55 from the NHS. I am mostly in the 1995 scheme with a small amount in the 2008. I don't have special status. I am in Scotland and the SPPA NHS part is absolute pants. More than 12 weeks to get a response owing to 'Covid' and 'technical issues'. The advice I can see online is confusing to say the least.

Specifically what I am trying to find out is if my lump sum (compulsory lump sum under the rules of the 1995 scheme) will be taxed if I retire at 55. I know I will lose approximately 25% of the annual pension and 16% of the value of the lump sum if I go before 60. But would the remainder ie what I get, be taxed?

Has anyone left the 1995 scheme NHS at 55? Did you have to pay tax on your lump sum?
(I am aware that annual pension will be treated as income and taxed as such - it's just the lump sum I can't find information on).

Thanks.

The lump sum is tax free

@BecauseOfTheRain thanks for responding - this is good to know !

I wasn't taxed, went at 57.

Checking that you know about McLeod changes to the 1995 pension? This means that you can choose to continue that section up till April 2022, rather than the previously enforced change in 2015. You don’t need to decide this till retirement.
For me, that extra 7 years makes a very big difference to my pension and lump sum if retiring at 55y, or up to normal pension age for that scheme at 60y.
You would then get the remainder of your pension from 2015 section at 67y

Following.

@Justthisonceharold - thanks. @quince2figs - yes I know a bit about the mcleod remedy but I find it all a bit confusing and the Scottish pensions agency for NHS are totally shit - they take forever to respond to queries - my friend’s DH was a fireman and he got fantastic, tailored advice about his pension options in the run up to retirement but as I say, the NHS side is not fit for purpose.

If you’re a BMA member their pension advisors are excellent.
I’ve just been through this and it’s a total minefield.
Mine was complicated by several other factors.
McLoud ruling is important, but you can decide this after retirement. I’ve not yet had the energy to try.

I also had an excellent financial advisor with knowledge of NHS pension schemes who I paid for calculations/advice. Really stressful without proper help. SPPA do eventually provide some help but it’s minimal/basic estimates which I found hard to understand.

Agree entirely about the NHS pensions organisations being useless. I won't bore you with their cock ups, but errors on their part would have led to me losing thousands a year and they ignored me pointing out their errors until I made a formal complaint.

My advice would be to become an expert on your own pension. Tables showing how much your pension is reduced by if you retire early are on their website. In the end I set up a spreadsheet with my own figures on it. That was the only way I could ensure that I knew what to expect (and they still got it wrong!).

Only other advice would be to see if your organisation has an in house pensions team who can support you. Our trust did, and they were fantastic.

@HibouMilou - I’m a nurse. @Justthisonceharold - agreed! I think I’ve skimmed over things as retirement was “years away” but I’m totally burnt out and wanting to leave sooner rather than later. I got a response from SPPA to a request last year which basically told me they couldn’t respond so I lodged a complaint and the complaints guy said what they said was nonsense and I got a proper response 2 days later after he escalated it. They are unbelievably shite. I worked as a nurse educator for a while and it was the teachers pension scheme - I’ve been trying to get that transferred into my nhs pension for over a year but again, all requests are basically ignored. It’s so frustrating. In house help in my organisation is not great unfortunately- they just tell me to contact SPPA!!

Hi @Mybestyear I know this thread is nearly a year old but can I ask if you got sorted?
I'm in a similar situation to you: I was a nurse with a pension in the 1995 scheme, but have recently transferred to teaching. I'm trying to limp on until 55, but not sure if I can do another 5 years!
I hope you were able to leave, as planned.

@Whatliesbeneath707 - yes, I am now getting my NHS pension. I have recently also applied for my teachers pension which is quite small.

I lost a bit from the NHS pension going early and the teacher one will be the same. If you are not still paying in (I had stopped paying into both) then the amount it goes up every year is ver small. I was prepared to lose some of it just to be able to give up my job which was literally killing me.

I’m now doing bank work as a clinical nurse which tops up my pension nicely and I only do a few shifts a month to pay for holidays. It’s great!

Thanks for replying @Mybestyear
I know exactly what you mean. There are days in teaching where I just cannot imagine me being able to do this in a years time, never mind 5 years. Your current situation sounds like the perfect balance.

@Whatliesbeneath707 - I loved teaching when I first started around 2005 for about the first 10 years or so. I grew to become so cynical of the University as a business model - any thing to get bums on seats, especially if they were overseas students. Widening participation setting up (some) students to fail as they couldn’t meet the academic rigour required and usually were working lots of hours to make ends meet so found it hard to spend time on studying. Foreign students with very poor written English. Yet if students failed, it was all about where I was going wrong !!

now we’ve got chatGPT/AI writing assessments for students in minutes - and we thought essay mills were bad! I think a return to invigilated exams as the only way of knowing the student actually did the work is on the horizon (well certainly at my old Uni). And we know this type of assessment disadvantages many non-traditional students, students from disadvantaged backgrounds and those with additional learning needs.

Covid and the switch to remote learning and the soul destroying “call centre” in front of a laptop top way of working was the final nail in the coffin.

my mental health is so much better and I feel fundamentally happy inside. I’m no longer abusing alcohol just to switch my brain off. I am (mainly!!) enjoying the work I do and wish I’d done it sooner.

caveat - I realise I am very fortunate and people will read this who are finding it really tough at the moment - so I hope I’m not coming across as smug.

Not at all smug @Mybestyear

Your comments about teaching in universities is spot on. Bums on seats = lowering of standards, but then staff are being asked why so many students are failing. It's the elephant in the room!
I'm at the point where I'm looking at clinical roles again as I feel at least I would be doing something purposeful, but I think I would struggle to go back to the NHS.
It's such a difficult balance between having a job you enjoy that has some purpose and having one that pays enough!