For those dedicated professionals who choose a career in the challenging environment of the health service, the NHS Pension Scheme is an undeniable benefit.
It remains one of the best workplace schemes in existence, offering a guaranteed level of pension when members retire.
Although there is a strong case for joining the pension scheme as soon as you enter the NHS, there are many reasons why somebody might not sign up until later in life.
It’s not unusual for people to change direction and join the healthcare sector as a second career. Many more join the NHS from overseas, either qualifying in medical school and working in their country of birth first or coming to the UK to carry out their training.
As the original intention might only to be in the country temporarily, the benefits of joining the NHS Pension Scheme might not be immediately apparent.
Often, for a variety of reasons, such as meeting a partner or being offered a substantive post, the decision is then made to stay in the UK and the advantages of that potential scheme membership are missed out on.
NHS Pension Scheme overseas members
If you are an overseas medical professional currently training or working in the NHS, there are options available to avoid missing out on the Pension Scheme benefits.
- If you join the NHS Pension Scheme and leave within two years of service, you will get a refund of the contributions you have made. That said, expect your refund to be less than what you paid in. One reason for this is the deduction of any income tax relief you benefitted from when you made your payments.
- If you stay for more than two years and then decide to return overseas, your benefits will become deferred and increase with inflation. These can then be paid in your country of residence when you choose to retire.
Making up a pension shortfall
If you join the NHS Pension Scheme later in life and have a shortfall, there are several opportunities available to you.
If you joined the NHS before 31st March 2008, you could have purchased added years although this benefit is no longer available to buy
Another option is an additional pension purchase. How much you can buy will depend on which scheme you’re a member of:
- If you’re part of the 1995 Section or 2008 Section of the NHS Pension Scheme, you can buy up to £5,000 of guaranteed index linked pension per annum. This is known as Additional Pension Purchase and can be bought as a single contribution lump sum or paid for over a maximum of 20 years.
- If you’re in the NHS Pension 2015 Scheme, the rules are the same, but you can buy up to £6,500 per annum, in multiples of £250.
Whichever scheme you are in, you can choose to build in survivor dependents’ benefits, for an additional cost. These will then be paid out to an eligible spouse, partner or child in the event of your death.
Alternatives to NHS options
In pension planning there are alternatives to those additional options available as part of the NHS Scheme such as money purchase arrangements. This is where a pension pot is built up through contributions and investment returns.
However, anyone making additional pension contributions of any kind needs to be mindful of certain factors including your annual allowance.
Everyone’s circumstances are different depending on when you join, when you want to retire and whether you have other pension arrangements in place.
Planning for the future
Whatever your ambitions are for the future, a fulfilling and secure retirement takes careful planning.
You may be new to the NHS and thinking long-term or approaching the end of your dedicated career, either way it is important that you are financially prepared for when the day arrives.
Content correct at time of writing and is intended for general information only and should not be construed as advice.