Why Leave the NHS Pension Scheme

Why Leave the NHS Pension Scheme

Please note that as of 5 April 2015 transfers out of the NHS pension scheme are no longer permitted, and the content on this page is no longer current. If your transfer paperwork was submitted before this date, the transfer will still proceed. For more information, please contact us.

Why Leave the NHS Pension Scheme?

There are several reasons why you might want to leave the NHS pension scheme, and transfer your pension into an overseas QROPS scheme:

Inadequate Pension Funding and Future Pension Reforms are Looming

One of the main reasons that so many doctors and other healthcare professionals have transferred their NHS pension into an overseas QROPS scheme is because they are worried that the amount that they think they will get at retirement will be able to be funded by the Government.

As reported in the UK Daily Telegraph, as recently as 2008, the NHS pension scheme had a deficit of £165 billion.

Whilst the scheme is currently funded with a surplus (partly as a result of the recent NHS pension reforms), the UK government has itself admitted that the scheme will fall into deficit by 2014, and require a £500 million bailout by the government – as reported by the Healthcare Journal.

Despite the pension reforms of 2008, the government has already acknowledged that these reforms did not go far enough, and more reforms – which will further reduce the value of NHS pensions – will go ahead in the next couple of years. Please read here for more details, from the UK government website.

Pass on your NHS pension to your loved ones after your death

Under the NHS Pension scheme rules, after you pass away, your spouse will only receive 50% of your pension income. And when he or she dies, then there is nothing to pass on to your children or grandchildren.

As a result, more and more doctors returning to India are taking a much more proactive approach to their estate and inheritance planning, to ensure that their pension is left to their loved ones after they have passed away.

NHS Pension Update – July 2014

The UK Government has announced that as of April 5 2015, members of the NHS pension scheme will no longer be able to transfer their NHS pension into a defined contribution scheme such as a QROPS pension plan.  This means that after April, former NHS employees, wherever they may live – even if they have already left the UK, and have continued their careers in India for example, will have to wait until they are 60 until they can touch their pension.

This contrasts very unfavourably with the conditions of a QROPS pension, where a tax free lump sum and a retirement income can be taken from the age of 50. However, there is still time to transfer your NHS pension into a more flexible QROPS arrangement. The new rules come into effect in April – and so until then you can transfer out of the NHS scheme. Please contact us for more details.

Have you returned to India and still have your NHS Pension? From 2015 you will no longer be able to transfer your NHS pension to a QROPS plan as a result of a UK government ban on NHS pension transfers – meaning you will have to wait until you are at least 60 before you can draw an income or take a tax free lump sum – as opposed to 50 under a QROPS pension.
For a free consultation on how you can still transfer your NHS pension into a QROPS pension plan before the deadline expires, please contact us immediately.