NHS pensions: think twice before opting out, nurses warned
Nurses are being urged to weigh up the short-term benefits of opting out of NHS pension against future financial security as many struggle with rising costs
Nurses who are struggling with the cost of living have been warned to think twice before opting out of the NHS pension scheme after the number of staff withdrawing from the scheme tripled in the past year.
Cost of living crisis pushes thousands of NHS staff to opt out of pension scheme
The latest annual report on the NHS pension scheme from the NHS Business Services Authority shows that 64,780 staff members opted out with deferred pension rights in 2022-23, up from 20,868 the previous year.
Changes to the scheme introduced in October last year mean many nurses now pay more in pension contributions each month.
At the time, unions warned some could be placed in the ‘terrible position’ of choosing between getting less money now or facing a poorer retirement.
NHS pension specialist Graham Crossley from wealth management firm Quilter said the cost of living crisis was likely to be a major factor behind the surge in numbers opting out.
‘Finances are struggling under the weight of the cost of living crisis and sadly many nurses may feel that they simply cannot afford to keep up contributions to the scheme,’ he said.
‘However, while understandable, opting out of the scheme for any reason may not be the best course of action and can have a serious impact on someone’s pension provision as well as their family’s financial protection.’
He stressed the decision to opt out was ‘not a decision to be taken lightly’ and said nurses should seek professional financial advice.
Nurses urged to reconsider decisions to opt out
Unison national officer Alan Lofthouse also urged nurses to think carefully before ceasing pension contributions: ‘The NHS pension scheme provides good and secure retirement incomes for its members. Anyone considering leaving the scheme should seek independent financial advice before making a decision that could prove damaging to them in the long term.’
Pension benefits will be deferred for those who leave the scheme if they have been a member for two years or if they have been a member for less than two years but have transferred a personal pension into the NHS scheme.
This means the amount built up will remain in the scheme and be paid at the normal pension age. Eligible members can opt back in.
Rule changes make it easier to 'retire and return'
The report also shows the number of pension scheme members returning to employment shot up from 1,743 in 2021-22 to 3,916 in 2022-23.
This may be due to financial pressures or moves by the government to make it easier to ‘retire and return’.
Mr Crossley said more nurses may be persuaded to come out of retirement or stay on due to changes to pension rules introduced this year. From this month some will be able to partially retire and still access their NHS pension.
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