As low pay combined with the cost-of-living crisis continues to impact nursing staff, it’s understandable that our members are looking for ways to make savings.
While opting out of the NHS pension scheme may seem like a good way to help make ends meet in the short term, the long-term financial consequences can be really detrimental.
I’d urge members to consider the following points.
1. Think long-term
The NHS pension provides a vital income in retirement. Opting out reduces the pension benefit payable meaning you may need to work longer and/or face poverty in retirement.
2. If you don’t pay in, the NHS doesn’t either
In addition to your pension contributions, employers make a contribution of 20.8% of pensionable pay. This equates to roughly £5,778 per year for a mid-point band 5 staff member and this contribution will be lost to anyone who opts out.
3. A pension isn’t just for retirement
As an active pension member, you can access your full pension in the case of permanent incapacity due to ill health. However, opting out could reduce these potential benefits.
4. Protect your loved ones
As part of the pension scheme, you could also be entitled to a death in service benefit of approximately two years’ pay. However, following opt out, these benefits are reduced to approximately two times the annual pension you would have received if you’d retired on your date of death. This is likely to represent a significant reduction in the amount payable to your nominated beneficiaries.
5. Pension freedoms
There are a range of options with your NHS pension such as converting some of your pension benefit into a lump sum or retiring and returning to protect your final salary.
Before making any decisions on your pension, I’d strongly urge taking some independent financial advice to ensure it’s the right choice for you long-term.
Financial support
If you’re experiencing financial issues, access expert advice and support via the RCN Welfare Service.
Before deciding whether to withdraw from the pension scheme, ensure you are getting everything you are entitled to to maximise your income first.
Do a quick online benefits check to see if you are entitled to any in-work benefits, such as Universal Credit.
Are you getting tax relief on your Uniform, NMC payments and RCN Subscriptions?
If you are still really struggling, there are charities and other sources of financial help that may be able to help pay for essential outgoings.
