How it affects retirement planning
The decision to end Seniority Payments for GP’s was made back in 2013 and will be enforced by 2020. No new applicants entered the system after 1 April 2014, but those already receiving Seniority Payments would be able to for a further 6 years, as negotiated by the BMA. What is the impact on this decision on retirement planning for GP’s?
Incentive to remain in practice
Receiving Seniority Payments is enough of an incentive for many GP’s to remain practising, delaying their retirement plans. Figures by the NHS show that the average annual income boost is around £6,000, but can be as much as £14,000, depending on length of service and experience.
The original contract stipulated that GP’s can start receiving the Seniority Payments from age 29 until the day they retire, so over the course of a doctors working lifetime, this additional sum of money can be significant.
Phase 2 changes
It is estimated that 13,000 doctors receive this award of money each year, however, the government, as part of their Phase 2, are gradually planning to reduce their spend by 15% per year, up until 2020, when the scheme will be abolished.
The British Medical Association (BMA) negotiated that the savings made by the government would be reinvested into General Practice, so that younger doctors would now be able to benefit, but this still leaves those more mature doctors with a gap to fill, and perhaps decisions to make.
Retirement planning for doctors
Will the up-and-coming reduction, and future cut in Seniority Payments, steer the profession into an earlier retirement? This was one of the key reasons why the BMA stressed that a 6 year window was necessary, to avoid a sudden gap of experience in the profession.
For those GP’s now planning an earlier retirement, creating a robust retirement plan with sufficient income to meet your needs and lifestyle, will be the key.
There are many options available for you if you start to plan ahead. A further consideration for you is how to best use your Seniority Payment income in the next 5 years, to maximise your returns.
Dental & Medical Financial Services specialise in retirement planning for the medical profession. Darren can talk through all your options and help you to meet your financial goals. Call Darren today.