Sunday, June 09, 2024

WORKERS CAPITAL

UK

How the NHS pensions works: Is superiority in-built against the private sector?

The NHS pension is a defined benefit (DB) set-up. With this kind of pension,  an employee’s membership guarantees them a fixed amount of money each month until their death.

By Dr. Tim Sandle
DIGITAL JOURNAL
PublishedJune 9, 2024


File photo: British nurses demonstrated in London for higher pay. - © AFP

Concerns with pay levels within the UK National Health Service (NHS) continue to grow with this past January marking the longest strike period in NHS history: a stretch of six consecutive days. The British Medical Association (BMA) are justifiably calling for a 35 percent pay rise for doctors, with NHS workers admitting they are struggling on their current salary.

With these concerns about take-home pay front of mind, some employees have opted to move into a private pension. Is this a wise decision or does it put savings at risk?

Tellingly, 25,000 of those choosing to leave the scheme are under 30 and over 10 percent of those earning less than £20,000 per year opted out. Recent statistics revealed over 66,000 NHS staff left the scheme between April and July, double the amount compared to the same period last year. Of those, 23,000 nurses felt they simply couldn’t afford to pay into the scheme.

Given that the regular monthly payments do guarantee a payout when it comes to retirement. Therefore, the decision to opt-out should not be taken lightly.

NHS Pension Management Service provider BW Medical’s Julie Mudditt outlines why the public sector pension schemes remain superior and why the NHS scheme, in particular, matters.

Mudditt states that the NHS pension scheme has over 3.4 million members and pays out £12 billion every year.The fact the NHS pension scheme is backed by the government means your pension is guaranteed. Unlike private pensions, the NHS pension is not invested in various avenues but is protected and will last you for the entirety of your retirement.

Mudditt adds that the government backing gives recipients of the NHS pension far more security than those investing in a private pension. As long as you contribute, you are guaranteed a pension when you choose to retire.

The contributions payable within the NHS pension scheme can be thought of as less of an investment in a fluctuating market and more as a membership scheme that pays towards assured financial stability for your future.


The NHS pension is a defined benefit (DB) set-up. With this kind of pension, Mudditt outlines, an employee’s membership guarantees them a fixed amount of money each month until their death.

Furthermore, says Mudditt, the pension will not run out and the amount of money you receive each month is based not on the state of your investments but on the length of your service and your yearly salary.

Continuous membership of the scheme also offers benefits to a member’s family, Mudditt observes, and dependents in the event of a person’s death.

Mudditt concludes: “If your salary allows, investing in the NHS pension scheme’s monthly payments offers you peace of mind that your retirement will be comfortable. The guarantee of a considerable pension throughout your retirement offers you both financial security and a degree of mental wellness. Although the mechanics of the scheme can be complex, it truly is one of the best ways to ensure you receive the reward you deserve for your time spent helping and healing people during your career within the NHS.”

She ends with: “Before you make any key decisions regarding your pension, speak to the NHS Business Services Authority. The BW Medical team would also always recommend seeking advice from a regulated financial adviser – that’s an individual working within financial services, rather than an accountant.”

Note: This article is not intended to provide financial advice, its aim is to present the advantages of the public sector scheme.



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