UK General Practitioners: Your Pension Options Explained

The NHS recognises through various initiatives, such as
?Improving Working Lives?, the importance of the work life
balance. General Practices also need to encourage a GP to
work for them, and will usually bend over backwards to
accommodate the right doctor.

Perhaps it will not be a surprise to learn that 25% of all
doctors work part time, with 50% of female doctors
preferring reduced hours.

So, whether you are already or are planning to work part
time for family reasons to help with childcare or simply
deciding to slow down a bit in your fifties, a lot of
factors are in your favour.

But what about the impact on your pension planning in
general and your NHS Pension in particular?

Let?s remind ourselves of a few facts:

?A GP?s NHS Pension is based on the lifetime earnings, not
simply the superannuable income the year before retirement.

?Broadly speaking if you work ¾ time it will take 4
calendar years for 3 years reckonable service to count for
your pension.

?Any hospital years will be counted as GP years if to your
advantage.

?There have been significant increases to the types of
income that count as superannuable.

?Uplifts in pension calculations for 2003-2006 are
substantial.

Pension A-Day

The changes to the general rules on pensions took effect
from 6th April 2006. These changes are large and
fundamental:

?There will be a fund size limit of £1.5 million,
regardless of the type of plan you have ? i.e. NHS ? Added
years - Personal Pension ? Additional Voluntary
Contributions etc.

?If you are projected to exceed this limit you may need to
take action to protect your fund from a tax penalty.

One of the first steps is to calculate whether you will
have an A-Day problem. If your NHS Pension is likely to be
£65,000 pa or over and you are retiring this year, you may
exceed the £1.5m limit (it?s possible to exceed the limit
even if your pension is below that amount).

The Whole Picture

When it comes to planning for your retirement, you should
make sure you are looking at your whole situation,
including wills and estate planning, and assessing how much
money you?ll need when you give up work. Most of our
clients simply want to know whether or not their money will
last them for the rest of their lives.

When calculating how much pension you?ll have you should
remember to take account of:

?Proceeds of practice sale or downsizing
?Lump sums and investments
?Inheritances
?State Pensions

Measurement

Retirement planning is not just about pension policies. On
many occasions a new client will learn that they will pay
40% tax in retirement. This may be because they have had no
real measurement to plan effectively, and have simply
amassed a number of policies.

What action should a part time GP take to plan ahead?

?Obtain your NHS Pension projection from the NHS Pension
Agency

?Obtain your State Pension projection from the post office
(BR19)

?Request private pension arrangements projections

?Assess your investment wealth from Isas and Peps etc

?Use a detailed expenditure template to work out what you
really need

?Even then, will you spend less after age 75?

?Create a strategy that you can revisit every year and use
it to measure where you are compared to where you want to be

Summary

Planning ahead is one of the most important elements of
retirement planning. Take the time to get your personal
strategy on course, and then it'll simply be a case of
reviewing the plan on an annual basis.

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Ray Prince is an Independent Financial Planner with
Rutherford Wilkinson plc, and helps UK Resident Doctors and
Dentists get the best deals on mortgages, protection and
investments, as well as helping them achieve their
financial objectives. Just visit
http://www.medicaldentalfs.com/article to get your free
retirement guide. Rutherford Wilkinson plc is authorised
and regulated by the Financial Services Authority.