Posted September 26th, 2011
If you are considering fixed protection then time is ticking – From April 06 2012 the Lifetime Allowance will reduce from £1.8m to £1.5m.
This will have significant impact on clients with pension values above the Lifetime Allowance.
To claim fixed protection you will need to not make any contributions to a money purchase arrangement after 2012, not set up a new arrangement unless you are transferring to it and your application needs to have been made by 05 April 2012. In addition, special regard needs to be taken about the benefits built up in the NHS Pension Scheme.
So if this is an issue, and you would like to talk, call me on 01204 663904 or email Phil@white-well.co.uk
Tags: Fixed Protection, Lifetime Allowance, NHS Pension, NHS Pension Scheme | Posted in Fixed Protection |
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Posted September 2nd, 2011
I am currently assisting a Dr client of mine on lifetime allowance matters and I had the novel idea of approaching the NHS Pensions Agency to see if they could assist me.
At the time we believed he had exceeded his permitted benefit accrual and would lose his enhanced protection, so naturally we wanted to know, so that we could apply for fixed protection in good order. Who better to tell us than those administering the scheme. Wrong.
This is the responseI got (some time later):
“I can confirm that the NHS Pensions does not get involved with protecting pension rights from
the pension charges. At retirement we will send Dr X his pension award letter with the percentage on how much his pension is over the Lifetime Allowance rules.
Regarding protection of his pension he will need to contact HMRC for further details.”
I am still awaiting a response to my next later asking whether they felt they owed my client a duty of care to assist in the matter.
So we are left with not knowing before the event whether enhanced protection applies or not. I have developed a number of spreadsheets which help me to advise my medical clients on both lifetime allowance and annual allowance matters.
If you would like some assistance, please get in touch on
01204 663904 or email me phil@white-well.co.uk
Tags: Enhanced Protection, Lifetime Allowance, Lifetime Allowance Rules, Medical Clients, NHS Pension, NHS Pensions, Protecting Pension Rights, Retirement | Posted in Lifetime Allowance, 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 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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