NHS Pension - Hot Topics Q & A

Q. Should I be buying Additional Service (Added Years) for my NHS Pension?

A. The first thing to say is that without the specific details of your circumstances we are unable to give you a specific answer, however can give you some guidance.

As you may be aware, when you enquire about buying Additional Service, the NHS Pensions Agency will inform you how many years you can purchase and what additional percentage of your pensionable salary you will need to contribute for that additional pension.

However, this still does not tell you if you should actually go ahead.

Let's look at an example.

We had a recent enquiry from a GP. He and his wife (also a GP) were considering Additional Service. Now in their forties, they had both been in the Scheme for a number of years and we were able to project that, in today's terms, they would build up a combined pension of £90,000 pa gross.

Now (and this is crucial), they predict that they will require £4,000 per month AFTER tax from age 60. We can see that they will already reach this goal with their existing pension projection.

What hasn't been mentioned yet is that for Mr GP, the 6 years Additional Service would cost £1200 gross per month between now and age 60 (£720 net as a higher rate taxpayer).

And they have £200,000 in investments that they will have access to at retirement.

So what should they do?

Technically, they do not need to invest more money into pensions. They could use the £720 (just his contribution) and invest this into alternative investments that will give them 100% access to the capital in the future.

Or…they could even spend it now.

The KEY is that you should do your research and carefully consider your options, as once you've committed to buying Additional Service there's no turning back.