Posted July 19th, 2011
I am receiving an increasing number of enquiries from GPs, doctors, dentists and consultants looking to opt out of the NHS pension scheme and take fixed protection to defer benefits until normal retirement.
When applying for fixed protection it is important to understand the way that NHS pension benefits escalate in deferment as this will have a major impact on whether the benefits are protected or not.
When you resign from the NHS scheme, your benefits are calculated to the point you leave the scheme, using pensionable salary to that date, and a pension figure calculated. This pension figure then gets cost of living (CPI) increases up to the date the point at which the pension is ultimately taken.
In theory, if the benefits grow by CPI and the fixed protection allows benefits to grow by CPI, then everything’s ok. I am a little wary, however, that protection may still apply. HMRC’s definition of CPI, and the dates it is derived from, may (and have in the past) differed from NHSPA’s version of CPI.
So when considering fixed protection and opting out of the NHS pension scheme be careful about how benefits might escalate in the future.
If you are a GP, doctor, consultant or dentist and would like guidance on how your NHS pension benefits are affected, please get in touch on 01204 663904 or email phil@white-well.co.uk
Tags: Consultant, Dentist, Doctor, Escalate, Fixed Protection, GP, NHS Pension, NHS Pension Scheme, Normal Retirement, Pensionable Salary | Posted in NHS Pensions |
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Posted July 12th, 2011
It seems a lot of senior medics are currently wrestling with the issue of whether to remain in the NHS scheme given the Hutton review, increasing costs and taxation and the dual issues of the Annual Allowance and the Lifetime Allowance going forward.
It could be tempting to come out of the scheme without considering the implications.
One thing to bear in mind is that despite all the changes which seem to be coming along like London buses at the moment, the NHS scheme still remains an excellent scheme. The benefits are still indexed in payment at least with a measure of inflation. In addition, the way that the NHS scheme treats the Lifetime Allowance charge is very generous.
I am currently working with a number of senior medics on their retirement plans. For those aged around 50 serious considerations are being given to how much future tax they might pay and whether ultimately the benefits received will be worth it. The closer to the normal retirement age clients are the easier this decision is because often the accrual is there. In these cases it is more about protecting the benefits against the LTA.
If you are a GP, doctor, consultant or dentist and would like guidance on what to do with your NHS pension benefits in relation to the Hutton review, the annual allowance or the lifetime allowance, please get in touch on 01204 663904 or email phil@white-well.co.uk
Tags: Annual Allowance, Consultant, Dentist, Doctor, GP, Hutton, Lifetime Allowance, Lifetime Allowance charge, NHS Pension, Normal Retirement Age, Taxation | Posted in NHS Pensions |
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Posted June 17th, 2011
I have just started work on two very interesting NHS pension reviews for GP doctor clients of mine both aged around 53 years old. The brief was to check what benefits had accrued to date and to review the future position of the NHS benefits against the Annual Allowance and the Lifetime Allowance.
Firstly, having ordered updated pension forecasts from the NHS Pension Agency in Fleetwood we checked the dynamisation figures and the service calculation to ensure their data was accurate. It was so no issues so far.
Next we checked how the annual allowance might affect the client. The projection for annual allowance purposes was similar for both clients. We are estimating that the growth in capital value in the 2011/2012 tax year was c.£43,000 for both. Again, there are no issues due to the annual allowance being £50,000. So far so good.
Indeed, using the new carry forward rules it would be possible to mop up approximately £48,000 worth of unused allowance from 2009/10 and 2010/11.
But before that would be advisable the position against the Lifetime Allowance needed to be checked.
Rolling the service forward to age 60 in 2018 and making certain assumptions with regard to pay and dynamisation the lifetime allowance values were both around £1.8m. Suddenly, the clients have a Lifetime Allowance issue because the Lifetime Allowance in 2012 will reduce in 2012 to £1.5m.
So, with this in mind the clients have to decide:
• When is the most optimum time to retire
• This is complicated by succession issues relevant to GP partners
• Will the Lifetime Allowance increase at some point between 2012 and 2018.
• Should I reduce the pension benefits by taking a higher pension commencement lump sum (tax free cash).
• Is the way the NHS apply the Lifetime Allowance charge an obstacle.
If you are a GP partner or doctor and would like some advice and guidance on how to make an informed choice on your NHS pension and retirement planning why not call me on 01204 663904 or email phil@white-well.co.uk
Tags: 2012, Annual Allowance, Capital Value, Carry Forward, Doctor, Dynamisation, GP, GP partners, Lifetime Allowance, Lifetime Allowance Values, NHS, NHS Pension, Pension, Pension Commencement Lump Sum, Service Calculation, Tax Free Cash | Posted in NHS Pensions |
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Posted February 8th, 2010
When setting up a new partnership (like any business) there are a million and one things to be sorted out before you start. A partnership agreement is often over looked but regrettably can often be needed in many instances.
A well drawn up agreement will deal with:
• How the business will be run
• Entry or exit of new partners
• Death
• Succession
• Retirement
• Valuations – property etc
• Disputes
• Other earnings
• Divorce
A recent discussion with a GP client of mine revealed that the lack of such an agreement has enabled a previous partner of his to continue to enjoy the rent & value increases of the business premises which he vacated over 15 years ago!
In the event of the death of a partner, the beneficiaries of the estate will usually be their family. They may have no experience of running a business and are unlikely to be able to contribute to it in any way. In these circumstances they will usually wish to withdraw their share of the capital at the earliest opportunity. Having partnership protection in place ensures that the family can receive a fair value for that interest.
From the surviving partners’ point of view, they will be continuing to run the business with a sleeping partner taking a share of the profits. They will be keen to ensure that they will be in a position to regain control of the business by paying the family their share of the business back as soon as possible. Partnership protection ensures they have sufficient funds to do so.
For further information on partnership agreements and protection, please contact me on 01204 663904 or advice@themedicalifa.co.uk
Tags: Death, Dentist, Doctor, Family, GP, Partner, Partnership, Partnership Agreement, Partnership Protection | Posted in Partnerships |
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Posted January 20th, 2010
With a big budget deficit to plug (and without a hint of irony given their own expenses scandals) the government has now turned its spotlight on to professionals believing them to be not declaring all their earnings.
See the headline in 12 January’s Daily Mail here.www.dailymail.co.uk/news/article-1242497/Middle-class-medical-professionals-targeted-new-tax-clampdown.html#ixzz0d58v5Dtz
First up is medical consultants, surgeons, doctors and dentists. If this proves “successful” HMRC intends to target other professionals such as Solicitors and bankers.
They have proposed an amnesty to allow any untaxed earnings to be declared. This will be available for 3 months only and after 31 March they intend to be more aggressive.
Of course, you would be forgiven for thinking that this is not new. The Revenue has always had the power to open an aspect or investigate a tax matter should they wish. You may have personal experience of this or know of a colleague who has gone through this. If you do as a busy professional you will know it can be stressful, expensive and time consuming.
Perhaps an audit of your income and outgoings with a professional financial adviser specialising in your field would help.
If you are concerned about these issues and would like to discuss matters further in a confidential manner, please contact me on 01204 663904 or email advice@themedicalifa.co.uk
This comes hot on the heels of the increase personal taxation measures which come into force in April 2010, see here – www.themedicalifa.co.uk/taxation/what-the-proposed-taxation-changes-in-april-2010-will-mean-for-you
Tags: Amnesty, dentists, Doctor, expenses, Medical, medical consultants, Surgeon, Tax aspect, Tax investigation, Undeclared earnings | Posted in Taxation |
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Posted July 16th, 2009
The government announced in April’s budget a number of major changes to the way they intend to tax high earners and their pensions. Of course, these changes may never come in but forewarned is forearmed.
To summarise, the proposed changes are:
1. The personal allowance will be restricted for people whose earnings are over £100,000. So for every two pounds they earn above that level, they will lose one pound in personal allowance.
2. This would mean that for someone earning over £113,000 per annum, there would be no personal allowance available.
3. A new top band higher rate of income tax of 50% will apply to incomes above £150,000.
4. The tax relief on pension contributions will be restricted from April 2011, for those people with incomes of £150,000 and over, and will reduce steadily until it is 20 per cent. That means the 40% tax relief will disappear completely once someone’s income hits £180,000.
Please note that this is all on top of the Lifetime Allowance issues which high earners have to contend with.
One simple way of reducing any tax burden at this level would be to make a gift aid donation to charity (which can even be backdated). This could create a potential win-win situation out of this changes.
If you wish to discuss any of the issues raised, please call us on 01204 663904 or contact us by email on advice@themedicalifa.co.uk
Tags: Budget, Charity, Consultant, Dentist, Doctor, High Earners, Higher Rate Tax, Lifetime Allowance, Personal Allowance | Posted in Taxation |
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Posted June 11th, 2009
Many people and surprisingly many financial advisers guess at how much money is needed to live comfortably in retirement.
The actual answer might surprise you. Finding this out sooner rather than later enables action to be taken. A Lifetime Cash Flow Forecast could be the key.
So, how much is enough?
Firstly, what does retirement look like to you? What do you want to do in retirement that if you were unable to do it would leave you feeling disappointed. Is it holidays, golf, or visiting family? Perhaps it is the purchase of a one off item, such as a boat or holiday home.
Whatever these goals are (and they could be anything) you need to set them down first. Once these are set in place, planning on how to meet future income and capital expenditure can then be assessed.
It is vital to set out what expenditure will be and how this might change over time. Basic expenditure may not fluctuate too much over time (except by inflation) and any extra spending will often be determined by your goals and what stage of retirement you are in.
The three phases of retirement
I like to think of retirement in three main phases.
1. The Golden years – these are the years when your health is good and therefore taking the opportunity to enjoy life is vital. Income needs are correspondingly high.
2. The Conservatory years – these come later when perhaps energy levels are lower and a more sedate lifestyle is required. Income typically reduces from phase 1.
3. The Later Life years – this is the stage when health is failing and more income may be needed to provide for health and care issues. Income needs can increase.
What do you think? What I truly believe is that by factoring the changes in spending patterns over these periods provides the key to successfully meeting your goals.
Lifetime Cash Flow Forecasting
A Lifetime Cash Flow Forecast provides a snapshot of your financial health now. It will determine whether your income and capital needs are met and therefore, highlight whether your goals are realistic. From this starting point the advice process can begin to truly add value by either planning to reach your target or protecting you from ever missing your target.
If you would like more information on answering the big questions or feel that you would benefit from this approach, please call us on 01204 663904 or contact us by email on advice@themedicalifa.co.uk
Tags: Consultant, Dentist, Doctor, Financial Adviser, Health, Lifetime Cashflow Forecast, Money, Retirement | Posted in Financial Planning |
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