Thinking of Early Retirement?  See the Effect on your NHS Pension

One of the core decisions to make when planning your retirement is at what age to retire.  If you’re thinking of retiring before age 60, the normal pension age for the NHS Pension, your income and pension lump sum will be reduced.  The rates by which they will be reduced are shown in the table below.  Note this refers specifically to active members of the 1995 Scheme.

Age

59

58

57

56

55

54

53

52

51

50

Pension

5%

10%

14%

18%

21%

25%

28%

31%

34%

37%

Lump sum

3%

6%

9%

12%

15%

17%

20%

22%

25%

27%

If you retire between the ages shown, e.g. at 58 years and 6 months, the rate will vary.

On the basis of these rates, if you are expecting a pension of £50,000 and a lump sum of £150,000 at normal pension age but you retire instead at age 59 you will receive a pension of £47,500 and a lump sum of £145,500.  If you retire instead at 50* you will receive a pension of £31,500 and a lump sum of £109,500.

*Note members who were in pensionable employment between 31 March 2000 and 5 April 2006 retain the right to retire from age 50.  Members who do not have membership between 31 March 2000 and 5 April 2006 do not have a protected minimum pension age and so have a minimum pension age of 55.

The pension will be paid at a reduced rate throughout retirement – it does not revert to the full rate at normal pension age.  It is important therefore to consider whether the reduced income from your desired retirement age will be sufficient. 

Taking a reduced income reduces the value of the NHS Pension for Lifetime Allowance purposes.  This is a consideration for those with Lifetime Allowance concerns but must always be weighed up against the reduced income for life. 

For personalised financial advice on your retirement planning including your options under the NHS Pension please contact Richard Higgs, Chartered Financial Planner, on 0117 966 5699 or at richard.higgs@wealthwestmedical.co.uk.

 

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