What a great time (for pensions) to be a part time General Practitioner!

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?

Lets remind ourselves of a few facts:

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

Broadly speaking if you work 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.

The NHS are in the process of discussing changing the normal retirement age from age 60 to age 65, which may impact particularly on GPs under 50.

Pension A-Day

The changes to the general rules on pensions take 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 (its 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 youll 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 youll 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

We havent been able to cover all the areas surrounding Pensions A-Day and your pension choices. To help you with your decision making weve written a free guide (see below).