independent financial advice only for bma members sessional gp’s understanding your pension and...

Independent financial advice only for BMA membersIndependent financial advice only for BMA members

Sessional GP’s

Understanding your pension and its benefits


Service for BMA Members

Re-launched on 12 September 2005 Independent financial advice provided by Chase de

Vere

- Professionally qualified advisers - Specialist holistic advice


Today we are looking at …

Understanding your NHS Pension - Recent and forthcoming changes

Being a Sessional GP and the effect on your NHS Pension Scheme and its benefits

Building financial security


Areas of advice

Income protection Life assurance and family protection Investments and savings advice Mortgages and re-mortgages* Estate planning NHS pensions scheme and benefits Pensions and retirement planning

* Your home may be repossessed if you do not keep up repayments on your mortgage.

Independent financial advice only for BMA members

Understanding Your NHS Pension


The NHS Pension Scheme (1995 section)


Key Facts

Final salary scheme for employed staff (officer) 1/80th pension accrual rate, 3/80th lump sum

- i.e. Doctor retiring with 40 years service will have pension equal to half final pay

CARE for practitioners (GPs) using dynamisation 1.4% CARE accrual rate, 4.2% lump sum Normal pension age 60


The NHS Pension Scheme (2008 Section)


Key Facts

For new joiners – from 1 April 2008 Matches existing structure – final salary for employed

and CARE for practitioners Pension age increased to 65 1/60th pension only accrual – no automatic lump sum 1.87% practitioner accrual – no automatic lump sum


What are the proposed public sector pension scheme changes and how

will they affect you?

Expected Implementation date 1st April 2015


Changes 1/54 Career Average Revalued Earnings (CARE) scheme Revaluation of active members benefits by CPI + 1.5% Normal pension age linked to State Pension Age

- Transitional (full) protection of NPA and current accrual for anyone within 10 years of current NPA on 1 April 2012

- Tapering protection for those within 13.5 years of their current NPA i.e. delayed switch to new scheme

Increased contributions Commitment to allow members who are TUPE’d* out to

remain in the NHSPS

*Transfer of Undertakings – Protected Employment


Accrued benefits

All accrued benefits (pension and lump sum) earned up to 1st April 2015 will be protected

Hospital doctors will keep their accrued 80ths or 60ths and these would be based on actual final pensionable pay at retirement

GPs accrued pensionable pay continues to be dynamised


Your Accrued Benefits to 2015

These benefits can be taken from current normal pension age

Option to pay additional contributions to fund early retirement of up to 3 years early without penalty (earliest age 65)

What happens if you still want the option to retire at age 60?


Your personal contributions

Pensionable pay in 2012/13

Contribution rate in 2013/14

Up to £15,431.99 5%

£15,432 - £21,387.99 5.3%

£21,388 – £28,823.99 6.8%

£26,824 - £49,472.99 9%

£49,473 - £70,630.99 11.3%

£70,631 - £111,376.99 12.3%

£111,377 and over 13.3%


Portfolio careers – contribution example

Post Income Calculation method

Value Tier

3 Sessions salaried GP

£21,000 Practitioner £21,000 9% based on £30,000

Appraisal Work

£5,000 Practitioner £5,000 9% based on £30,000

GP Locums £4,000 Practitioner £4,000 9% based on £30,000

2 Sessions Hospital

dermatology

£12,000 Officer (whole time equiv calculated)

£60,000 11.3% based on £60,000 WTE


Contribution Tiers

Contribution level is calculated separately for both officer and practitioner income

So instead of 12.2% on total earnings- Officer – 11.3% based on whole time equivalent of £60,000- Practitioner – 9% based on total practitioner income of £30,000

With locum work it can be difficult to estimate earnings in advance

At the end of the year any arrears must be paid to the local area team


Completion of forms

Forms need to be completed to record your estimated and actual income. These are know as self assessment certificates

These can be found at the below website

http://www.nhsbsa.nhs.uk/2529.aspx

Guidance on their completion can be found at

http://www.nhsbsa.nhs.uk/Documents/Pensions/Type_2_Self_Assessment_Notes_2012-13_.pdf


New rules for locum – ‘employer contributions’ Responsibility for the payment

of employer 14% contribution changed on 1.4.13

Practices are now responsible for these payments

Locums must collect employer contribution from the practice and MUST pay to the local area team along with employee contribution

Cheques now payable to NHS Commissioning Board

Locum forms A and B retained but amended

If you choose to pension income it MUST be ALL NHS income


How are your pension benefits calculated? – Officer vs Practitioner


Why is there a difference?

Typically a hospital doctor has a more steady level of earnings which increases over time with responsibility and career progression

The whole time equivalent salary at retirement is used to calculate pension benefit- Part time service is scaled to its whole time equivalent- This ensures part time employees are not

disadvantaged.

GPs earnings tend to fluctuate more It is therefore not always fair to calculate pension on a

final salary basis


What are the key differences?

OFFICER

Salaried scheme – 1/80th or 1/60th of final pensionable pay for each year of service depending on scheme – plus potential lump sum

This is calculated on basic salary only and not any banded earnings

PRACTITIONER

On completion of GP training your method of pension calculation changed

This is generally more beneficial

Pension is calculated using lifetime earnings

Dynamisation starts


What types of GP does this effect?

On completion of GP training ALL types of GP have their pensions automatically calculated using the practitioner method

Any hospital service before becoming a GP is incorporated into the final calculation

Any concurrent officer service is typically treated as practitioner service

Non – detriment test carried out at retirement


Will the Recent Pension Taxation Changes effect you?

Annual Allowance reduced from 6th April 2011 to £50,000- This will reduce further to £40,000 on 6th April 2014

What does this mean to you? For defined benefit Occupational Pension Schemes it determines

the amount you can accrue in your pensions in a given year It IS NOT the amount you actually pay


As a Sessional GP…..

Whilst unlikely to affect you be aware…..

If you receive two or more significant increases in your pensionable earnings in a three year period – take care!

- e.g. GP Trainee to locum GP to salaried GP

You can come very close to exceeding the £50,000 allowance- This will reduce further to £40,000 from 6th April 2014

Tax is charged on any excess at your marginal rate


Your NHS Sick Pay entitlement

What will you receive and when?


Sick Pay Benefits – Hospital doctors or GP Trainees

Service Full pay Half pay

0 – 4 months 1 month -

Next 8 months 1 month 2 months

1 year 2 months 2 months

2 years 4 months 4 months

3 years 5 months 5 months

5 years + 6 months 6 months


Sick pay benefits – GPs

Salaried – GMS- In line with NHS sick pay scheme

Salaried – PMS- Locally negotiated with employer

GP Principal- In line with practice agreement

Locum- Zero


Ill Heath Retirement Pension

Tier 1 – entitled to early payment of pension with no reduction

Tier 2 – entitled to an enhanced pension. The enhancement will be two thirds of prospective membership with a minimum of four years


Life Assurance Provision

For younger doctors the scheme has improved- In the event of death if you are married, have a

registered civil partner or have a non legal partner, survivor benefits will be paid

- Benefits are also payable to any dependent children- Precise calculations dependent on your age, NHS

service, NHS income and personal circumstances will ensure that your loved ones will be financially stable in the event of your death

Is this enough considering your own circumstances?


Who would be entitled to survivors’ benefits? Legally married husband or wife Registered civil partner Non legal partner

- Must have been financially interdependent for two years- Partner must have been nominated and registered as

such at the NHSPA- Must have been legally entitled to enter into a marriage

or registered civil partnership at the time of the nomination

If no survivors’ benefits paid out then enhanced dependents’ benefits can be paid


Whilst these benefits are excellent will they be enough?

Let us consider the ‘what ifs’


Protect your most important financial asset

YOURSELF AND YOUR ABILITY TO WORK

It pays for your housing It supports your family It supports your lifestyle and

entertainment It supports your future plans and

aspirations

All of these things rely on a stable income ANDWhat happens when your NHS sick pay ceases?


Is Protecting your income all you need to consider?

What about your future pension entitlement?

Will you want to return to work full time?

Will you want a break to recuperate fully, or spend precious time with your family?

Would you want to take time off work if a loved one became seriously ill?

Will you need to modify your home?


Lifestyle Choices

In the event of a more serious illness or accident give yourself choices – retain control of your financial future- Protect against loss of future NHS Pension - Repay your mortgage or other liabilities- Make any necessary changes to your home

Following potential recovery from a serious illness- Give yourself the opportunity to return to work on a part

time basis- Will you want a break to complete your recovery or

spend time with your family?- Critical illness cover can give you these choices


Protecting your Family

Ensure your mortgage and other liabilities are repaid on your death

We can accurately calculate the level of any life cover you may need

Full consideration is given to the benefits provided by the NHS Pension Scheme by our specialist advisers

Our primary objective is to maintain any dependants standard of living


Locum GPs – Death in Service

Scheme membership for freelance GP Locums Scheme is activated by virtue of completing GP Locum forms A and B. A NHS GP Locum whilst in active pensionable employment is covered by the death in service scheme

A NHS GP Locum who is inactive (i.e. between jobs and not currently working at a Practice) is not regarded as being in active pensionable employment. - They will receive a lump sum of three times their

pension on death rather than a death in service lump


In summary

Understand your NHS Pension and how it is calculated

Build a strong financial plan – REVIEW, REVIEW, REVIEW

Take the opportunity to meet with a specialist BMA Services Independent Financial Adviser who can discuss your individual requirements


How do we get paid?

Remember the initial meeting is without obligation

Product charges

Fees

Combination of the Two


Your views are important


Questions?


Important InformationIf you are unsure of the suitability of this presentation to your circumstances please contact BMA Services, to introduce you to Chase de Vere for independent financial advice to be provided.

The levels and bases of, and reliefs from taxation are subject to change, and any changes might be applied retrospectively.

The Financial Conduct Authority does not regulate trust advice, tax advice, will writing or offshore investments.

Issued by Chase de Vere Financial Advisers Limited.

Chase de Vere Independent Financial Advisers Limited (registered in England Number 2090838) is authorised and regulated by the Financial Conduct Authority. A member of Swiss Life Group. Registered office: 60 New Broad Street, London, EC2M 1JJ. VAT Registration Number 503 3745 71.

BMA Services is a trading name and trademark of the British Medical Association. The British Medical Association is an introducer appointed representative of Chase de Vere who are independent financial advisers, authorised and regulated by the Financial Conduct Authority, licensed to use the BMA Services trademark and trading name.