245,000 NHS Pension Scheme exits put down to lack of understanding
15 February 2019
Chase de Vere Medical believes a lack of understanding around the benefits of the NHS Pension Scheme is resulting in too many people opting out of the scheme.
The national firm has called for there to be greater education or advice given to NHS employees, as a recent Freedom of Information request by the Health Service Journal revealed that 245,561 NHS staff had opted out of the pension scheme in the last three years. The figures equate to around 16% of the scheme’s active membership.
The numbers show that not only are a number of doctors and consultants leaving because of concerns around the annual and lifetime allowance tax charges they face, but many younger employees are also choosing to opt out, often because of affordability.
However, Andrea Sproates, head of Chase de Vere Medical, said the benefits NHS employees are choosing to give up would be very expensive to replicate if they were purchased separately.
Sproates said: “The whole package of being a member of the NHS Pension Scheme is extremely valuable, but is under-valued by a lack of understanding and awareness of what members’ contributions are really paying for, how much the government adds and the benefits the scheme provides.
“It is clear from the eye-watering opt-out rates that there is a huge need for NHS employees to be provided with financial education or advice, so that they can make informed decisions about their pension scheme. At present it is likely that many members are leaving the scheme without a clear understanding of what they’re giving up, a decision they are likely to regret in the future.”
According to Sproates, doctors and consultants may be better staying put even after tax charges are taken into account or could explore ways to reduce the charges, such as taking a larger retirement lump sum, rather than make the decision to opt out.
What are the top skills employers typically want to see from a paraplanner? Lewis Byford, co-founder of financial services...
Are you signed up to the Professional Paraplanner daily website alert? For more technical, tax, pensions, investment, retirement, protection...
With £355 billion of debt having been accumulated in the past year and a potential £204 billion or more to be...