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Early retirement

Where can I find out about NHS Pension Scheme early retirement factors? I have been told that tax relief on NHS superannuation contributions is only available on earned income, not on pension income. Given that I am 58 years old, is it sensible to retire, take my NHS pension and carry on working until I have earned enough to cover the superannuation contributions made before retirement?

You can find the early retirement pension factors in the Medeconomics Database at www.healthcarerepublic.com/management. There is more information about them in 'Scheme Guide - NHS Pension Scheme'  which you can download at the NHSPS website, www.nhsbsa.nhs.uk

Pension contributions benefit from tax relief up to the higher of £3,600 gross or your relevant earnings (subject to an annual allowance cap which is £245,000 for the 2009/10 tax year). Relevant earnings essentially mean earnings from employment and/or taxable trading profit.

Pension income, earnings and trading profit are all subject to tax at the recipient's highest marginal rate.

It is impossible to know in advance whether or not it will make sense for an individual to take their NHS pension benefits using the 24-hour retirement rules. This is because there are a number of as yet unknown variables involved such as longevity, future inflation, tax rates, investment returns and so on.

Generally a decision to take pension benefits should be driven by lifestyle and financial objectives, such as a desire to cut down or stop work entirely or a need for additional income and/or capital. I suggest you discuss this with your financial adviser.

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