Currently pay into the NHS Pension scheme but would like to retire at 55 (currently 35)

11 January 2023

Question by Matt

Currently pay into the NHS Pension scheme but would like to retire at 55 (currently 35) - cannot access the NHS pension (without reduction) until 68/70. How would I best be able to fund this? Via a SIPP/LISA etc. Thanks.

Answered by Chris Broome

Dear Matt,

That's a great question to ask.

In short, yes, you would need to utilise other tax wrappers to create a number of additional savings pots from which to spend from age 55 to 68/70 (as you detail).

A Lifetime ISA (LISA). You can put in up to £4,000 each year, until you're 50. You must make your first payment into your ISA before you're 40. The government will add a 25% bonus to your savings, up to a maximum of £1,000 per year. The Lifetime ISA limit of £4,000 counts towards your annual ISA limit. This is £20,000 for the 2022 to 2023 tax year.

A Stocks and Share ISA. You can pay a total of £20,000 a year into a S&S ISAs each tax year. If you contribute £4,000 into a LISA also, you'll be capped at a further £16,000 into your S&S ISA.

A Personal Pension Plan, though you'd need to be careful to not breach your annual allowance each year, which may be tapered (reduced) if your total annual earnings are over a certain limit.

And, if you've maximised each of the tax wrappers allowances, you could direct surplus income into a General Investment Account (GIA). A GIA does not have the same favourable tax treatment as a pension or ISA, but it does provide a useful environment to deploy/invest excess cash (versus leaving it in a bank or short-term fixed rate account).

I would always recommend you seek out regulated independent advice before proceeding with any of the above, especially regarding the NHS /new pension point.

I hope this answer helps. If you need anything else just let me know.

Kind regards

Chris Broome

Answered by

Chris Broome

Chartered Financial Planner

My name is Chris Broome and I own a wonderful fixed-fee and independent financial planning practice called Longhurst.