Despite the fact that the NHS pension scheme has continually provided highly attractive benefits through the years, many health workers have been persuaded to leave this occupational scheme and transfer their fund somewhere else. Of course, every case is different, but transferring out of any defined benefit final salary pension scheme, with its built-in guarantees, can result in a significant loss in final pension benefits.
Currently, there are three separate NHS pension schemes in existence – The 1995 and 2008 schemes plus the new scheme in 2015. The latter, which was effective from April that year, is less generous than the previous NHS final salary pension schemes. It can be considered more of a promise to pay than creating a physical fund value that could then be transferred elsewhere in future. Again, from April 2015, it has not been possible to transfer out any pension under either of the earlier schemes.
Sadly, we are aware of nurses having moved away from the profession for a period of time and being advised to transfer away their NHS pension on the basis that the scheme was in some way poor or non-performing. Even re-joining the scheme at a later point may have seen irreparable damage in terms of lost benefits and guarantees.
Especially back in the late 1980s and 1990s, it is also unfortunately the case that some NHS workers were told to contract out of SERPS (the top up portion on National Insurance contributions) and exit their pension scheme completely. Others, in turn, who could have joined the NHS pension scheme, were given financial advice not to and instead, contract out and remain in a private pension. Often, the reason given for either course of action being a potential saving in National Insurance contributions.
The Financial Services Act 1986 became law on 29 April 1988 meaning that poor pension advice from that point in time can potentially be challenged, albeit that in some cases it may have taken place many years ago.
If you think that you may have suffered a loss as a result of poor pension advice, Beat the Banks are here to help. Our free pension check can establish whether moving away has left you out of pocket. To find out more call 01382 200474 or text Pension to 87007