Agency Nurses – What are your Pension Options?
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Did you know that as an agency/flexible workforce nurse, you have options other than NHS to start out your own pension plan? The most lucrative and assurance you can get will depend on how much money you are willing to put away or how early you are starting to contribute to the plan.
What are my options?
There are at least three types of options to start your own pension plan.
This type of pension plan is contributed by your National Insurance and calculated towards your future State Pension entitlement. The UK Government will make payment to you when you have reached the State Pension Age, which depends on your gender and age. Be aware that the default retirement age of 65 years old no longer exists. You can keep working after you reach the State Pension age. You can check your State Pension forecast on www.gov.uk/check-state-pension, fill in the BR19 application form, send it by post, or call the Future Penson Centre at 0800 731 0175.
Employers are obligated to offer workplace pensions to eligible employees. According to www.gov.uk, as of 2017, there are more than 8 million people already saving into workplace pensions. If you are enrolled in the workplace pension, you and your employer jointly contribute to the scheme and receive a tax credit for your contributions. You can also opt-out. The minimum your employer pays is 3%, but in some schemes, your employer has the option to pay in more than the legal minimum. If so, you can pay in less as long as your employer puts in enough to meet the total minimum contribution.
If you work for a Local Authority, your option includes a Local Government Pension Scheme or Universities Superannuation Scheme if you are university staff.
If you are employed in the independent sector, you may have an option along with the employer to contribute to the pension scheme initiated by your employer. The amount you and your employer pay towards the pension depend on what type of workplace pension scheme you are in (defined contribution or defined benefit) and whether you have been automatically enrolled in a workplace pension (majority, you will contribute based on your total earnings between 6,240 and £50,270 a year before tax) or you have joined voluntarily (the employer must contribute the minimum amount if you earn more than £520 a month, £120 a week or £480 over four weeks, if you earn less, your employer does not have to contribute).
If you become self-employed or stop working, you may be able to continue contributing to your workplace pension. You may use Nestpensions.org.uk as one of your workplace pensions schemes for the self-employed.
If you are changing jobs or taking leave, you may be able to carry on making contributions to your old pension or combine the old and new pension schemes. If you are not continuing to pay into the scheme, the pension still belongs to you and the money will stay invested until you reach the pension age and withdraw your fund.
A bank or other financial provider usually offers this type of plan. You initiate the scheme, choose whether a managed or self-select pension account, and make regular contributions that can be arranged monthly or make one-off payments in your fund. You can have a personal pension if you are employed, self-employed or not working. Other than yourself, your spouse or other people are able to contribute. You also can contribute to other people’s personal pensions. The majority of private pensions are flexible and portable. Be aware of the minimum initial investment requirement and annual fee deduction as these vary between one financial provider and others. Your bank or financial provider will provide any tax relief if applicable – usually, you get 25% of your pension pot tax-free. In a typically defined contribution pension arranged by you, your contribution money will be invested in shares, bonds, property, and cash according to your wish. You will decide how risky you want to invest your contribution’s fund. Usually, some schemes move your money into lower-risk investments near retirement age, but it may not happen automatically. So be aware and ask your pension provider. Once you reach the age of 55, you can cash it out in a lump sum, take some cash out, buy an annuity, or leave it as it is. You can also diversify your fund and choose a different investment method, depending on how comfortable you are in playing the risk.
Which is the best option?
This depends on your situation. As an Agency Nurse, your best option could be a private financial provider or your local bank. Agency nurses overall tend to earn more than bank and other nurses in the UK, so there is a real opportunity to increase your pension contribution as an agency nurse.
Your other option is to have more than one pension scheme throughout your career. There is no limit to the amount you can save up in your pension schemes or the number of different pension schemes you can belong to. But there are limits on the total amounts that can be contributed across all schemes each year if you receive tax relief on contributions. You can join a workplace pension scheme even if you have already received money saved up in another pension fund or you are still contributing to another fund, such as a personal pension.
Start with assessing your current income, your goal of the retirement age and your career path. Research and contact your preferred pension scheme. The more you know, the more you have peace of mind to start your own retirement.
If you are a nurse interested in a varied career and want to start future-proofing your pension plans – call us today and we will talk you through our multiple open nursing opportunities across the UK!