NHS Pension Calculator - do you require personal pension provision?
Using the NHS pension calculator to predict your NHS pension income in retirement will give you a general picture of your overall retirement planning and pension income, when you finally retire from the NHS.
The basis on which the NHS manages its pension system, however, is a separate issue, and one which must be carefully considered in tandem with simply looking at projections for pensions income. The NHS pension scheme, along with the teacher’s pension and also the civil service, are ‘unfunded’ schemes providing final salary pensions, i.e. pensions that are guaranteed in relation to your income at retirement (see below). However, due to accounting practices unique to the public sector, the future liabilities (amounts due for payout) by these schemes have been massively underestimated, with many experts believing that the true liabilities in the schemes could be 2 or even 3 times what we know today.
In addition, the NHS Pension Calculator does not provide a NHS pension calculation for those who have joined the New NHS Pension Scheme since 2008.
With that in mind, the information sought by those using the NHS Pension Calculator must be taken in the context of possible changes that may take place in future, to ensure the stability of the scheme. It could well be prudent, therefore, to at least consider other, additional options that are available, and setting up additional savings and investments or even a personal pension, alongside your NHS pension provision, may be worthy of consideration.
If you would like to evaluate the contribution that a personal pension could make to your retirement, our pension calculator tool allows you to see now how much you would get, based on how much you could afford to save.
Would you like to hear more about supplementing your NHS pension with other savings and investments alternatives? Make an online pension advice enquiry or ring freephone 0800 678 5929 now.
Another aspect of the NHS Pensions calculator is that your full pension entitlement, as indicated by your NHS pension calculation, relates to those who work up until the NHS retirement age of 60. If you are hoping to retire before that age, your pension will be reduced. Again, it could be worth taking professional pensions advice and considering making a personal pension provision, or other investments.
The NHS Pension Calculator shows your pension benefits split into two elements: your annual pension income in retirement, and the tax-free lump sum you will receive when you retire.
The results from the NHS Pension Calculator are based on 1/80 of your highest pensionable salary in your last 3 years of service, for each year of membership of the scheme. This gives your annual pension income. Based on that, the NHS Pension Calculator works out the lump sum you stand to receive as the standard multiple of 3 times your annual retirement income. Together, the sums comprise the total NHS income on which to base your retirement planning.
For an employee retiring at age 60 on a salary of £30,000 at retirement, the NHS Pensions Calculator indicates that their annual pension income would be £11,250. The NHS Pension Scheme Calculator then shows that their lump sum on retirement, based on 3 times that amount, would therefore be £33,750.
Early retirement with the NHS pensions calculator
The NHS pension scheme reduces your pension if you decide to retire before the standard retirement age of 60. A person wishing to retire early at 55, for instance, would have their pension reduced, even if they had achieved 30 years service by that time.
The NHS Pension Calculator also shows how these reductions apply, by showing the figures for the normal retirement age at 60 alongside the reduced figures for early retirement. The NHS Pension Calculator will show, therefore, that an employee retiring at 55, on a salary of £30,000 and with 30 years of service, would have their pension reduced as follows.
The pension they would have received at 60 (£11, 250) is reduced to £8,583.75.
The lump sum they would have received at 60 (£33,750) is reduced to £28,485.
The NHS Pension Calculators can provide the relevant projections for any chosen retirement age.
The NHS Pension Calculator does not apply to those who were already retired or were no longer members of the NHS pension scheme as of 1st April 2008. The maximum number of years of service that can count towards benefits is 45.
Do you need further advice on the NHS Pension Calculator or pension scheme? Contact Principle First now with a pension advice enquiry or ring freephone 0800 678 5929 now.
