NHS workers who have transferred out of the NHS pension scheme may not have been aware of what they were giving up.
16% of NHS workers, that’s nearly 250,000 members, opted to transfer out of their NHS Pension Scheme between 2015 and 2017.
It’s thought financial pressures and a lack of understanding of the benefits involved with a final salary scheme such as the NHS Pension Scheme, have created this so-called pension transfer influx.
Former pensions minister Sir Steve Webb even came out and said that the NHS needed to “…take urgent action to tackle this epidemic of pension opt-outs” as the risk of NHS workers facing “retirement poverty” becomes a real threat.
Members have been subject to a freeze on take home pay in recent years and it is thought this was a major factor in people opting out. However, the short-term gain of more money each month may mean some members are 9x worse off in the long term regarding their pension value. Younger members aged between 26-35 were the highest group to leave the scheme.
Final Salary pensions or Defined Benefit pensions like NHS Pensions, are considered valuable. This is mainly due to the benefits that come as part of these schemes. These benefits may include a guaranteed income for life during retirement as well as benefits for your family in the event of death. Also, many grow in line with inflation and don’t have extra running costs like many private pensions do.
It’s only in exceptional cases that a pension transfer into a private pension scheme, such as a SIPP, would be considered a suitable option.
It’s rarely the case that transferring from a final salary scheme is a good move, so if you were advised by a financial adviser to transfer your NHS pension, you might want to get that advice double checked as it may affect your nest egg. It may also be mis-selling and you could have a case to make a claim for compensation.
You are not required to use our services to pursue your claim. You can also seek further advice or shop around subject to any time limits within which a claim must be made.
It is possible for you to present the claim for free, either to the firm or person against whom you wish to complain or to the statutory ombudsman (Financial Ombudsman Service or Pension Ombudsman Service) or the Financial Services Compensation Scheme, whichever is applicable to your claim.