My wife has a final-salary NHS pension of over thirty years, but has
been seeking to 'fill in' a few missing years (when she had to switch
to a private pension) by buying extra years ahead of her retirement.
She was advised to do this by several people (though none, as far as
I'm aware, were professional pension advisors) and has currently bought
back approximately three years at a cost of around £250 per month.

However, after a recent conversation with someone working in local
government (also with a final-salary pension), we have begun to
question the wisdom of this, given that her employers don't contribute
to these extra years as they do with her normal pension contributions.

Can anyone advise us on this? Is it worth buying back missing years or
could the £250 a month be better invested elsewhere? Neither of us are
particularly clued up when it comes to pensions, so any impartial
advice would be gratefully received...

Nigel

Nige wrote:

Can anyone advise us on this? Is it worth buying back missing years or
could the £250 a month be better invested elsewhere? Neither of us are
particularly clued up when it comes to pensions, so any impartial
advice would be gratefully received...

Not without knowing her age, salary, planned retirement age, proportion
of salary paid per year of contribution, acceptable level of investment
risk, and the number of years for which she will pay the extra £3,000 a
year.

I'm not clear whether the £250 is per month of equivalent service, in
which case the duration of the payment doesn't matter, or out of each
month's salary.

£3,000 at retirement, at 60, will buy something of the order of £100 per
year in pension. Assuming a 60th final salary scheme, she is close to
retirement age, and that you mean £250 per equivalent year of service, I
would suggest that if her salary is significantly more than £10,000
(allows for the very rough figures) a year, it would be good to take the
NHS offer. If it is not, it might be worth looking at actual annuity
rates.

Please verify all facts as this is no more valid financial advice than
you have received from your friends, who will know more of the facts.


PS Is the NHS pension still fully index linked? I think most private
annuity have a cap on the inflation rate that will be supported.

"Nige" wrote in message
...
My wife has a final-salary NHS pension of over thirty years, but has
been seeking to 'fill in' a few missing years (when she had to switch
to a private pension) by buying extra years ahead of her retirement.
She was advised to do this by several people (though none, as far as
I'm aware, were professional pension advisors) and has currently bought
back approximately three years at a cost of around £250 per month.

However, after a recent conversation with someone working in local
government (also with a final-salary pension), we have begun to
question the wisdom of this, given that her employers don't contribute
to these extra years as they do with her normal pension contributions.

Can anyone advise us on this? Is it worth buying back missing years or
could the £250 a month be better invested elsewhere? Neither of us are
particularly clued up when it comes to pensions, so any impartial
advice would be gratefully received...

How long until she does retire, how much is she currently paying per month
for her pension, how much does she earn and what are the terms of her final
salary pension (1/60th, 1/40th per year). How long does she expect to
survive retirement for - is she a massively overweight heavy smoker, or
someone in excellent health? Then you can quickly do the sums to work out
if it`s a good deal or not.

Nige wrote:

My wife has a final-salary NHS pension of over thirty years, but has
been seeking to 'fill in' a few missing years (when she had to switch
to a private pension) by buying extra years ahead of her retirement.
She was advised to do this by several people (though none, as far as
I'm aware, were professional pension advisors) and has currently bought
back approximately three years at a cost of around £250 per month.

However, after a recent conversation with someone working in local
government (also with a final-salary pension), we have begun to
question the wisdom of this, given that her employers don't contribute
to these extra years as they do with her normal pension contributions.

Can anyone advise us on this? Is it worth buying back missing years or
could the £250 a month be better invested elsewhere? Neither of us are
particularly clued up when it comes to pensions, so any impartial
advice would be gratefully received...

As some other replies have stated, we need some more numbers, but generally
speaking, the NHS pension is much better than what you would get elsewhere.

Jonathan Bryce wrote:

As some other replies have stated, we need some more numbers, but
generally speaking, the NHS pension is much better than what you would get
elsewhere.

Don't forget, though, that this is not a straight either-or comparison
between using some money (be it from savings or diverting it from current
earnings) to buy added years in the NHS pension, and investing the same
money in some other pension.

There are loads of other options, such as spening it now, or just keeping
it in savings (or adding it thereto).

Questions to ask oneself include:

How adequate is the existing unenhanced pension?
How much more valuable is it to boost it by buying extra years?
Might it be more valuable, once drawing a pension, to have more capital
than more income?

On Dec 31, 12:53*am, Nige wrote:
My wife has a final-salary NHS pension of over thirty years, but has
been seeking to 'fill in' a few missing years (when she had to switch
to a private pension) by buying extra years ahead of her retirement.
She was advised to do this by several people (though none, as far as
I'm aware, were professional pension advisors) and has currently bought
back approximately three years at a cost of around £250 per month.

However, after a recent conversation with someone working in local
government (also with a final-salary pension), we have begun to
question the wisdom of this, given that her employers don't contribute
to these extra years as they do with her normal pension contributions.

Can anyone advise us on this? Is it worth buying back missing years or
could the £250 a month be better invested elsewhere? Neither of us are
particularly clued up when it comes to pensions, so any impartial
advice would be gratefully received...


I once knew a teacher who had a similar opportunity to buy extra years
in a final salary pension scheme. i calculated that the deal she was
being offered was by far better than anythign you could hope to get
commercially. Ony a taxpayer funded scheme would offer such a deal :-
(

R