A common question we are asked by doctors and dentists following the changes to the NHS Pension Scheme 2015, is “should I be doing something else to financially support my retirement instead of the NHS Pension?”.
For accuracy, this requires a bespoke calculation taking into account individual circumstances, but here we summarise a few points from both sides of the debate.
As this is a highly sensitive area of retirement planning, with many variables, this article is nor intended to provide advice, simply to highlight some factors for consideration.
The 2015 NHS Pension
The plus points
The NHS Pension contributions can be as high as 14.5% and has some added fringe benefits such as Life Cover (death in service), Ill Health Retirement pension and benefits for the spouses pension.
In addition, investing in the NHS pension means a lot of your retirement planning is carried out for you, which has it’s advantages.
At Dental & Medical Financial Services we carry out many bespoke calculations for doctors and dentists to compare their investment into an NHS pension compared to that of a private pension to work out the optimum combination for you.
Email us today for your FREE comparison – NHS v private pension
Simply email us your salary, age and desired retirement age + your name + phone number so we can contact you to discuss your options.
Many of the calculations we prepare for doctors and dentists from all age groups, show that investment into the NHS pension can be still a valuable option. However, many healthcare professionals are opting to not put “all their eggs in one basket” and spread the risk by considering other retirement options too.
The negative points
On the down side, the generous nature of the NHS pension scheme may put some investors into issues with the lifetime pension allowance, which is subject to further reductions from April 2016.
Subsequent tax charges could leave a bitter taste for some.
Also, penalties for early withdrawal prior to retirement age may affect those doctors and dentists who wish to remain flexible about their retirement age.
A final note on the NHS pension; if annuity rates rise, this could throw an added spanner in the works – so something to keep an eye on.
Private pension planning
Since the Pension Reform, private pension investment is becoming a more attractive option for many doctors and dentists who had perhaps before just invested into the NHS scheme.
Private pension planning can be seen to have advantages over the NHS Pension, in it’s flexibility for withdrawal from age 55 and, whilst aspects such as breaching the lifetime pension allowance limits still applies for private pensions, investors are finding it a beneficial addition to their retirement plan, alongside their NHS contributions and on occasions, an alternative.