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Old May 23rd 2012, 12:04 am   #1
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Default NHS Pension

Hi All,

Just looking for a bit of clarification in regards to NHS Pensions.

My wife is a nurse and worked in the NHS from July 1995 to Aug 2009. We now reside in Perth.

We have obtained a transfer quote from NHS Pensions to see the value of the fund.

We are debating whether to transfer the funds over to her super account here; but we received some informal advice that if the fund guarantees a minimum level at retirement then we would be better to leave it where it is, as funds now will only make a retirement payments based on the funds value at retirement. I'm sure there's a name for this but I'm afraid I don't know it.

Looking on the NHS pensions website it states that it will pay "A pension worth 1/80th of final year’s pensionable pay per year of membership", which we are assuming to be the figures we have been quoted in the information we have been sent.

Is this then the defined payment or have we just been quoted based on what she has paid in over the years?

Any clarification would be gratefully received, or pointers to better explanations of how all this works.
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Old May 23rd 2012, 12:20 am   #2
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Default Re: NHS Pension

Quote:
Originally Posted by Idlewood View Post
Hi All,

Just looking for a bit of clarification in regards to NHS Pensions.

My wife is a nurse and worked in the NHS from July 1995 to Aug 2009. We now reside in Perth.

We have obtained a transfer quote from NHS Pensions to see the value of the fund.

We are debating whether to transfer the funds over to her super account here; but we received some informal advice that if the fund guarantees a minimum level at retirement then we would be better to leave it where it is, as funds now will only make a retirement payments based on the funds value at retirement. I'm sure there's a name for this but I'm afraid I don't know it.

Looking on the NHS pensions website it states that it will pay "A pension worth 1/80th of final year’s pensionable pay per year of membership", which we are assuming to be the figures we have been quoted in the information we have been sent.

Is this then the defined payment or have we just been quoted based on what she has paid in over the years?

Any clarification would be gratefully received, or pointers to better explanations of how all this works.
your wife accumulated 14 years in a final salary scheme. This will guarantee her a pension on retirement of 14/80ths of what her salary was when she left.

assume her salary when she left was 25k.

Her annual pension would be (14/80)*25000=4375

If the transfer quote isn't enough to buy a pension equivalent of 4375 a year then leave it where it is.

I've been here for 14months, but before I left 100k gbp pension pot would buy you roughly a pension of 6k, if that is still the case the transfer pot would need to be around 73k.

If it's significantly less than 73k my guess would be it's not worth it.
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Old May 23rd 2012, 1:13 am   #3
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Default Re: NHS Pension

Hi BingoBob,

The transfer value is for £105k, annual pension of £6k.

Is it worth bringing over or leaving where it is?
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Old May 23rd 2012, 1:43 am   #4
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Default Re: NHS Pension

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Originally Posted by Idlewood View Post
Hi BingoBob,

The transfer value is for £105k, annual pension of £6k.

Is it worth bringing over or leaving where it is?
That is an annual return of just under 6% - what sort of return is your super fund giving? Look at the exchange rate trends as well before transferring money - 3 months ago you only got $1.45 to the pound, now it's at $1.60, not sure if it's still rising or has plateau'd out.
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Old May 23rd 2012, 2:37 am   #5
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Default Re: NHS Pension

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Originally Posted by Idlewood View Post
Hi BingoBob,

The transfer value is for £105k, annual pension of £6k.

Is it worth bringing over or leaving where it is?
That sounds about right, you need to decide if you want to gamble, in essence that's what you'll be doing.
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Old May 23rd 2012, 2:55 am   #6
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Default Re: NHS Pension

So, if I'm undertanding this right if we left it in the UK, we would have a pension of £6k a year guaranteed upon retirement age.

If we transfered it here, it would go into super account and whatever that cashed out at retirement age would be what we would get (maybe more than the equivalent of £6k, maybe less than £6k).

Is that correct? I also appreciate Cherokee's comments about exchange rates etc. Especially with Greece/Europe jumping off a cliff at the moment.
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Old May 23rd 2012, 4:11 am   #7
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Default Re: NHS Pension

If left in the UK the pension income would be taxed in Oz as income.

If pension transferred to Oz Super fund you would have to pay tax on the increase in the transfer value since you arrived in Oz (Aug 2009??). It's worked out in OZ$ NOT pounds so maybe you've made a loss so no tax liability.

Once it's in an Oz Super fund the pension received is tax free (assuming you are over 60)
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Old May 23rd 2012, 4:25 am   #8
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Default Re: NHS Pension

Moot point about the tax implications Kiwipaul.

What about my summary of leaving it there/transferring it here as described in my last post above? Is that premise correct? I intend to get some professional advice on all this before I do anything, I just want to get my head around it before I do.

Many thanks!!
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Old May 23rd 2012, 4:43 am   #9
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Default Re: NHS Pension

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Originally Posted by Idlewood View Post
Moot point about the tax implications Kiwipaul.

What about my summary of leaving it there/transferring it here as described in my last post above? Is that premise correct?

Many thanks!!
That's perfectly ok but the pension will be considered income in Oz and you will be taxed accordingly. The same applies to your UK state pension. Oz has higher tax free limits once you reach 65 and so if your total income is below this limit no tax.

BUT your Oz state pension might be reduced if your income is beyond limits which are set much lower than tax limits.

Any Oz pension(from super fund) you receive is not subject to tax but can affect your Oz state pension.

Oz state pension is reduced once your income reaches a certain figure.

Very complicated subject and this info is to the best of my knowledge correct but I'm no tax OR pension expert.
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Old May 23rd 2012, 4:57 am   #10
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Default Re: NHS Pension

Here the Oz pension web site that explains what your income can be without affecting your state pension. I believe income would mean ALL sources of income, British pension, bank account interest, Oz super payments, dividend payments, etc.

http://www.centrelink.gov.au/interne...nts/chartc.htm

From this it looks like a couple can recieve income of $264 /2 weeks before state pension starts to be reduced. So your yearly UK pension income of 6,000 pound alone will cause your Oz state pension to be reduced.
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Old May 23rd 2012, 11:20 pm   #11
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Default Re: NHS Pension

Bingobob - you retiring at 105?! A commutation factor of less than 20:1 would be amazing in this day and age!

TBH a fund of £105k to provide a pension of £6k is pretty good and if you haven't got quite a number of years to retirement could be tough to match in a money purchase fund. Plus is that the value of the pension at date of leaving or at current date? It's unlikely to be at retirement age as they usually use CPI so don't project (take care if they do project as that 6k might then only be an estimate). (By the way the phrase you were looking for re NHS is either final salary or defined benefit scheme)

But it's worth noting that is taxable. I didn't know that Aussie super income isn't taxable and that could make a difference. Plus the risk you take relying on every month's exchange rate at retirement (as it gets paid by TAPS) versus getting a known rate now.
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Old May 23rd 2012, 11:33 pm   #12
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Default Re: NHS Pension

Hi Abi,

The letter states pension at date of leaving £6,217 and currently £6,743.

As my wife is only 44, thats 16 years till retirement. Does that mean the figure only applies if she was actually retired and isn't the actual figure she would get in 16 years, thats just what she would get now? Presumably if thats the case, it all depends on how the future investment goes then for how much she'd actually get at retirement or is based on the equivalent of the £6 vale in 16 years timer? If that makes any sense....

And thanks for the correct terminology!!
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Old May 24th 2012, 4:26 am   #13
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Default Re: NHS Pension

Another thing to consider - what happens to your wifes UK pension in the event of her death ? How much of her pension is paid to you as her spouse ? Is there a lump sum ? You may find that in these circumstances that a large amount of the funds are lost. If you transfer them to Australia, you have more control over what happens to those funds and can put them into a scheme where you do get the balance paid in a lump sum or annuity.

My wife found that her 240k fund in the UK would only pay me a 5 year pension of 2K and no lump sum on her death. The remaing balance of 230k would be , in effect, lost.
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Old May 24th 2012, 8:27 pm   #14
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Default Re: NHS Pension

Quote:
Originally Posted by Idlewood View Post
Hi Abi,

The letter states pension at date of leaving £6,217 and currently £6,743.

As my wife is only 44, thats 16 years till retirement. Does that mean the figure only applies if she was actually retired and isn't the actual figure she would get in 16 years, thats just what she would get now? Presumably if thats the case, it all depends on how the future investment goes then for how much she'd actually get at retirement or is based on the equivalent of the £6 vale in 16 years timer? If that makes any sense....

And thanks for the correct terminology!!
The amount payable at retirement will be higher - it will be increased every year between date of leaving and retirement - usually by CPI but it used to be RPI (and maybe NHS kept RPI cos some schemes did - they should specify in the quote they've given you). You can't retire before age 55 (and it's reduced if it's paid early) so the 'at now' figure is notional - the date of leaving figure revalued to now.

Left with the NHS it's not dependent on future investment - it's that figure they've quoted you plus revaluation to retirement (it's worth noting that revaluation is supposed to be designed so its 'real' value at retirement is the same as its value at leaving - inflation and all that).

Move it to Oz and it's very dependent on the investment growth - which is why the younger you are the better as we all know the theory about investments being the best method of increasing your money only over the long term and only if you can ride out dips (for eg delaying taking your money if there's a dip in returns - loads of people lost out hugely in 2001 and on a regular basis ever since, also loads of people suffer because that factors used to determine how much pension you get are getting worse as we all live longer - with a final salary pension like NHS that is not something that needs to bother the member (though it does bother the scheme - a lot))

Spuddyo - On the event of death - Idlewood would get a spouse's pension payable immediately (usually 50% of your wife's pension revalued to date of death). Usually no lump sum but occasionally a return of contributions (again details would be in the paperwork). Your missus must have a weird scheme - I've never encountered one like that but it must have been the same premise in the UK too - almost all final salary schemes are 50% spouse's (or better) and money purchase schemes are return of fund on death.

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Old May 24th 2012, 10:30 pm   #15
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Default Re: NHS Pension

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Originally Posted by abi31 View Post

Spuddyo - On the event of death - Idlewood would get a spouse's pension payable immediately (usually 50% of your wife's pension revalued to date of death). Usually no lump sum but occasionally a return of contributions (again details would be in the paperwork). Your missus must have a weird scheme - I've never encountered one like that but it must have been the same premise in the UK too - almost all final salary schemes are 50% spouse's (or better) and money purchase schemes are return of fund on death.

The scheme is with RBS who took over the Nat West staff pension scheme a number of years ago. We have written to them on two occasions to enquire about the benefits payable on 'her' death, and they have confirmed that only 2K p/a for 5 years would be paid out to me. They say the spouse pension is based on a percentage of her salary when she left the company 16 years ago. It's blatant theft, and I am amazed they get away with it. We have already requested a transfer to an Australian fund and have been told it could take 3 - 6 months to complete. The hit taken on the exchange rate and the tax payable to the ATO will make a hole in the value, but better than the risk of losing most of it to the RBS book-makers.
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