NHS Pension Scheme - Is it worth it?

NHS Pension Scheme – Is It Worth It?

Retirement. The very word invokes images of a time so far away in comparison to now it’s pretty hard to comprehend. We rarely think more than a couple of years ahead, choosing instead to live for the moment but why is it becoming increasingly more important to do so?

It all comes down to money

The SRA or state retirement age keeps on increasing, we’re living longer lives and with that comes the need for more income for those extra retirement years. If that doesn’t sound like your kind of thing then putting in the groundwork now is more important than ever.  

Why NHS Pension?

Working within the NHS for your training years means you’ll get opted in to the highly regarded pension scheme. So what is it about this scheme that makes it so good?

-The NHS gives huge employer contributions! Seen as one of the best contribution rates around, the NHS gives a whopping 20.6% of your pre-tax salary. That’s £5,934 in your FY1 year or £6,756 as a Foundation Dentist in England (other rates apply for the rest of the UK)! If you opt out you can never claw this back. To gain access to this you will be required to contribute 9.3% of your salary. Employer contribution rate arrangements to remain for 2020/2021 | NHSBSA

-You get extra added benefits like death in service, ill health retirement etc.

-You get tax relief on your pension contributions. That’s right, the money that you put in would normally be taxable but by assigning it to a pension you bypass that nasty scenario. Opting out will mean you lose 20% (as a basic rate tax payer) of this figure needlessly to the taxman. Pension contributions - NHS Employers

When Do I Get It?

You get your pension at the ‘normal retirement age’. This is when you leave the NHS and have your pension paid. You can take it at the minimum retirement age (currently 55) but the NHS will claw back a percentage for each year you choose to retire early. Check your State Pension age - GOV.UK (www.gov.uk)

You can take this option but its best to speak to a financial advisor to tactically plan how to do it way in advance.

So what do you get? On the date of your retirement you can take 25% of your accumulated pot as a tax free sum. The other 75% you will be paid as a taxable income. The figure you receive will very much depend on how long you have contributed for. Retirement Guide (V24) - 05.2018 .pdf (nhsbsa.nhs.uk)