QUESTION: I am a full-time GP and will be 60 on the 4 October 2014. I intend to retire at 60 but then return to the practice.
I bought extra years in early 1980. Not many people seem familiar with the scheme under which I bought the extra years. The payment was a fixed one and related to the house officer salary at the time. I understand that when my pension is calculated these extra years will be multiplied by the salary at the time of purchase and then dynamised. Yet I understood at the time of purchase that what made the extra years valuable was that at retirement they will reflect my income at a much more senior level and, therefore, higher rate than that of a house officer starting my career. I am very interested to know what you think.
Can you please also advise which date will be best for me to retire without any actuarial reduction?
ANSWER: There was an option for members of the NHS Pension Scheme (NHSPS) to purchase added years (AY) by way of a one-off lump sum payment provided that the purchase took place within 12 months of the member first joining or re-joining the NHSPS.
Main scheme benefits in the NHSPS 1995 Section can be taken free of early retirement factors (ERFs) from age 60 onwards and from age 65 onwards in the NHSPS 2008 Section.
AY benefits must be taken at the same time as the main scheme benefits however. ERFs will be applied to AY benefits if taken before the selected AY contract age which can be either 60 or 65 (or 55 for members with Mental Health Officer status).
- Kevin Quinn is a chartered financial planner at Ramsay Brown Financial Services Limited.