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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