How to review your NHS employee benefits
NHS workers generally receive a strong employee benefits package. This often includes a defined benefit pension scheme, sick pay periods of up to 12 months and death in service benefits, including a lump sum and dependents pensions.
However, thanks to our knowledge of the options available and our experience of reviewing financial wellness, NHS workers can benefit from our bespoke NHS Financial Wellness Review.
Understanding the benefits you have
Freedom of information requests have reported op-out rates of up to 16% from the NHS pension scheme. An element of this is almost certainly down to a lack of understanding about the advantages of opting-in.
Some of this is driven by commentary surrounding changes to the scheme. This rightly highlights the 2015 version as being less generous than earlier editions, but does not always highlight the benefits of being in the scheme. Some of the changes are easy to understand, for example the change from 1/80th or 1/60th accrual rates to the new 1/54th. Others are not as clear, such as the change from a ‘final salary’ calculation to career average earnings, which requires inflation assumptions and forward projections to understand what the new scheme is likely to be worth in retirement.
Many people who opt-out do not understand that they are also giving up their rights to a lump sum death benefit in the event of their death whilst in employment, which is another example of the lack of knowledge NHS workers have on their benefits.
How the benefits you have interact with private financial planning solutions
Using our specialist knowledge of protection markets, we can help NHS workers ensure they have protected all of their financial needs, using the benefits available through their employment to minimise costs.
A good example of this is mortgage protection. Many people want their mortgage cleared for a surviving spouse and children in the event of their death. By fully understanding the benefits payable under the NHS scheme, we can calculate the amount of shortfall that is needed to be covered by a private arrangement. This will normally reduce the premium commitment compared to covering the whole mortgage amount.
The same applies for protecting income in the event that someone is unable to work due to ill health whilst employed by the NHS. We can use specialist markets to arrange income protection insurance that kicks in only as and when the NHS benefits fall away. This can greatly reduce the costs of having comprehensive cover.
Planning for retirement
Defined benefit schemes can be very difficult to calculate for retirement age. It can get even more complicated if someone is considering early retirement. By using our specialist modelling tools, we can determine the value of pension benefits at any age and then model the viability of retirement and ensuring financial security.
This can be even more relevant for people considering partial or phased retirement as you must also be aware of the impact of reduced income late in your career on your overall pension.
To find out more about NHS Financial Wellness Review or if you have any questions after reading this blog post, please do contact us on 01282 452255 or leave us a message on our website. Our team will be only too happy to help you create effective plans for your future.