Is the property market a 
good alternative to NHS pensions?

14th February 2018 by Nigel Farrar

Is the property market a 
good alternative to NHS pensions?

As part of a diversified financial portfolio you would expect to see property and pensions represented well, with property normally being your main residence, and some form of pension planning e.g. the NHS pension scheme in the mix.

However, with NHS Pension Scheme contributions as high as 14.5% of pay for some, penalties of c. 5% per year if you want to take benefits ‘early’, and possible tax charges if your NHS Pension causes you to breach your annual or lifetime allowances, you could be forgiven for asking if you should prioritise property over pensions.

But even contemplating such a swing is fraught with difficulty. In trying to choose between the two, the problem you have is that you are comparing apples with bananas. The NHS pension scheme is a gold plated benefit that is guaranteed to pay you an income in retirement. You contribute to the scheme on a monthly basis, building up benefits over a period of time which is increased by inflation each year. When you take your pension, this is further protected by inflation increases payable for the rest of your life.

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