NHS pension disappointment.

[Stillearninglife]

After 33 years in the NHS I have been battling with pensions as they “lost” years and years of my pension due to “clerical errors “.
Now I have a prediction which I intend on taking at 55.

Seemingly one of the best pensions around, reading of other people’s pensions, it is utterly crap.

33 years with a lump sum of less than £80k then monthly payments of less than £800 per month is so low. All those years at B7 diligently paying in thinking I will be ok financially and it’s just dire.

I left the NHS due to conditions and pay some time ago (2 years ago) so nothing is going into the pot, so I’m taking it at 55 next year.

Anyone had similar experience with NHS pension?

If they've "lost" years and you are not getting what you are owed then you should try the union first and a solicitor second.

Then it's a case of taking it earlier as you'll be receiving it for longer

Taking it at 55 will mean a huge reduction. That’s your choice not to leave it until the normal vesting age. 10k a year from 55 with inflation linked increases will be worth at least 300k, on top of the 80k lump sum.

I’m afraid anyone taking their pension that early and no longer working realistically needs to have other sources of income or savings to bridge through to normal retirement age if they are to avoid a substantial drop in the money available to them.

Have you checked you have taken your pension from the 1998 scheme look up Mcloud Remedy. My Dh has taken his from the first scheme at 50 and has a very good pension and lump sum.

This is my position , I ‘retired’ aged 48 and my NHS pension kicks in next year when I’m 60 , there were definitely penalties for taking it earlier than that .

If the OP had continued working in the NHS and paying into the pension scheme she would have kept SCS and been able to take 95 scheme at 55 without reduction. But having left employment and the pension scheme the status will have been lost as you need to be an active member of the scheme when claiming the pension at 55.

SCS, which had now closed was for nurses, midwives, health visitors and physiotherapists. I suspect (not within my knowledge area) that psychiatrists came under the old MH officer status.

OP you don't have Special Class/status, because you need to still be working in NHS at 55,to keep it. I've dm my figures, but our situations are different.

She lost SCS when leaving NHS employment and the pension scheme before the age of 55. So normal scheme pension age for 95 scheme is now 60.

By NOT taking a 1995 pension with SC at 55 you are effectively losing money. Theres some great FB groups full of advice, but taking the pension and lump sum at 55 and continuing to work, usually part time, is the most common advice. But you most definetely should take the pension at 55, regardless of the amount.

@Allthings well said.

I joined the Civil Service at 20 and an older colleague explained how valuable the pension was. I tracked it and made sure I learnt about it.

My advice to anyone is every month check your payslip, keep all your P60s and check your state pension each January. If it’s not right much easier to put right.

If you are in a public sector defined benefit scheme you get an annual statement - check it is right and keep it. At the same time spend an hour reading through the scheme guide to build your understand of the scheme.

A lot of people are impacted by McCloud and there will be lots of threads in here asking for advice.

If you are impacted my advice is get your last pension statement now and read the scheme guides.

She no longer has SC. She has left the NHS.

Ahhh i only read the first few posts and saw people offering incorrect advice, my mistake.

I'd just realised that, and was editing my post, but you got there first

Are you in a special class & therefore eligible for retirement (with no penalties)? Because the 80K vs 800 per month doesn't add up / make sense.

If your pension is currently deferred as such, then it IS going up each year by RPI which is applied each April - last year this was 10%.

Sorry yes 1995

I still don’t think you’re understanding. “It” isn’t “sitting” anywhere. It doesn’t exist. There is no pot of money.

All pension contributions you or your employer made were used to pay the pensions of NHS employees who have already retired.

Your pension is simply a promise to pay you money from the future earnings of other NHS employees, according to various (generous) calculations of entitlement.

If you decide to take the pension early there is a penalty for that in the monthly amount you’ll receive because it is likely to be paid to you for a larger number of years than if you take it later.

You can look at what the deduction for that early retirement will be an decide if it’s worth it based on your expenses, your own health etc. You could decide to take it early and spend some and invest the surplus income if you’re still working in another role so take a split approach. The actuarial deduction for retiring so early, however, will likely be significant so if you’re still working in another role it may be worth waiting a few years and living off your earnings for now given how overly generous NHS pensions are and the disproportionate amount you’ll therefore gain in monthly income by waiting a few years compared to withdrawing money now and investing it yourself (and this approach has less risk given recent stock market volatility and the index-linked nature of NHS pensions).

Essentially even the amount you’ve quoted is very generous when you consider what someone would have to pay privately to buy an annuity with similar benefits aged 55. It works out as an equivalent of almost £900 of pension value for every month yoh worked over 33 years and I presume you made contributions that were nowhere near that.

If an actuarial reduction has been applied (and it's a big if, given your earlier responses about SC) that would be of the order of 30%. So, without that reduction, the £800 a month would be £1,150.

Why isn't it growing?

I don’t see how you can claim you paid £900 per month of contributions. If your salary when you stopped working for the NHS was ~£50k you’d have been in the range where employee contributions are 10.7% of salary (the very maximum being 12%) i.e. £446 per month. And presumably earlier in your career you were earning lower amounts and then paying a lower percentage contribution of that lower amount per the scales.

It just doesn’t stack up. For you to have been contributing £900 pcm that would have been 21.6% of your highest salary, and far more earlier in your career. Perhaps what you’re referring to is the notional “employer contributions” that weren’t made by you or taken from your salary? These were no cost to you, and essentially are an accounting fiction.

You're understanding is correct. Your pot would be adjusted annually for inflation until you reach your normal pension age, but that would be the only increase because DB schemes aren't invested in the stock market so don't have the opportunity to grow in the same way DC schemes can (of course, the value of such schemes can go down as well as up!).

Please also take note that your monthly pension is taxable. If you are working elsewhere you could end up paying 40% tax on that £800

Incorrect.

She left the NHS and has therefore lost SCS. That only applies to members who are still contributing to the scheme at 55. If you leave before 55 your pension age reverts to 60 for the 1995 section. SCS has never applied to the other sections.

OP, you can calculate the amount yourself to check the statement is correct.

1995 section (I'm assuming you didn't move to the 2008 in Choice 1 or Choice 2, or have a break of more than 5 years).

Your final salary whet you left the NHS ÷80. Then multiply that by reckonable membership years (years worked from starting date to 31/3/2022, excluding your maternity gaps). This gives you the yearly pension if taken at 60 with the standard lump.sum.

For the amount you'd get taking it at 55, multiply the above by 0.8.

2015 section

Calculated your actual earnings from 1/4/2022 to leaving date, and divide by 54. This gives you the yearly pension if taken at 67 with no lump sum.

For the amount you'd get taking it at 55, multiply the above by 0.563.

Both these will be increased by inflation from the date you left.

As one who is receiving a pension from one of the public bodies schemes,I don't understand how your lump sum is 80000 but your pension is only £800 a month. Have you opted to maximise the lump sum,which will obviously decrease monthly payments?

Lots of people have said this. If you’d read the comments you would have seen this! The OP has even replied thanking for the clarification

You really need to check if taking it early at 55 and investing it is a better option than leaving it to normal retirement age now you know you don’t have scs. I suspect leaving it would be the better option but you need either financial advice or to be able to do the sums accurately yourself.