In 2019 Robson Laidler Wealth wrote a blog entitled NHS Pensions – handy hints to plan your exit
This has been one of our team’s most viewed blogs yet since 2019 there have been a few changes, which you should be aware of. One thing that hasn’t changed and perhaps has accelerated since the pandemic, is the number of doctors considering retirement. You may be one of them?
So, what has changed?
- The impact of the Lifetime Allowance on your benefits
The current Lifetime Allowance (the amount of pension benefits you are permitted to have in the UK). This is currently £1.073m but was set to increase with CPI every year. The Government has frozen it in the March 2021 budget for five years. Will this have an effect on your pension if you’ve accrued around the £47k mark. It’s likely this will have a negative impact!
- The Annual Allowance and impact on your benefits
There has been a positive change thanks to the BMA lobbying. Before if you had taxable income of over £110,000 or above it was necessary to check your Adjusted Income to establish if your £40,000 Annual Allowance would be tapered down. This threshold has been increased to £200,000, which has meant that many doctors have regained their full Annual Allowance. Depending on your income this could be a positive change but it’s always a good idea to check and request an Annual Pensions Saving Statement from NHS Pensions. They are free.
- The McCloud Judgement
Following successful lobbying it was deemed that the change to the NHS Pension Scheme back in 2015 was unfair and that more time should have been given to members to plan for the future. If you retire between now and 2023 you will be given your current accrued benefits but in 2023 NHS Pensions will write to you with a couple of options. They will recalculate what would have been due had you an extra 7 years’ in the 1995/2008 Scheme. Depending on your circumstances this could be a positive thing.
What hasn’t changed?
Being honest about what you spend now and thinking about what you need in retirement. Will that change? Can you use other assets/invest your lump sum tax efficiently to top up your pension?
This is real financial planning. We’ve got some great software, which we use with clients to help make decisions now about retirement/phasing out of work.
If you’d like Robson Laidler Wealth to give you a clearer picture of your financial future then get in touch.