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Independent financial advice only for BMA members Sessional GP’s Understanding your pension and its benefits.

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Presentation on theme: "Independent financial advice only for BMA members Sessional GP’s Understanding your pension and its benefits."— Presentation transcript:

1 Independent financial advice only for BMA members Sessional GP’s Understanding your pension and its benefits

2 Independent financial advice only for BMA members Service for BMA Members  Re-launched on 12 September 2005  Independent financial advice provided by Chase de Vere -Professionally qualified advisers -Specialist holistic advice

3 Independent financial advice only for BMA members 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

4 Independent financial advice only for BMA members 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.

5 Independent financial advice only for BMA members Understanding Your NHS Pension

6 Independent financial advice only for BMA members The NHS Pension Scheme (1995 section)

7 Independent financial advice only for BMA members 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

8 Independent financial advice only for BMA members The NHS Pension Scheme (2008 Section)

9 Independent financial advice only for BMA members 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

10 Independent financial advice only for BMA members What are the proposed public sector pension scheme changes and how will they affect you? Expected Implementation date 1 st April 2015

11 Independent financial advice only for BMA members 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

12 Independent financial advice only for BMA members 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

13 Independent financial advice only for BMA members 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?

14 Independent financial advice only for BMA members Your personal contributions Pensionable pay in 2012/13Contribution rate in 2013/14 Up to £15,431.995% £15,432 - £21,387.995.3% £21,388 – £28,823.996.8% £26,824 - £49,472.999% £49,473 - £70,630.9911.3% £70,631 - £111,376.9912.3% £111,377 and over13.3%

15 Independent financial advice only for BMA members Portfolio careers – contribution example PostIncomeCalculation method ValueTier 3 Sessions salaried GP £21,000Practitioner£21,0009% based on £30,000 Appraisal Work£5,000Practitioner£5,0009% based on £30,000 GP Locums£4,000Practitioner£4,0009% based on £30,000 2 Sessions Hospital dermatology £12,000Officer (whole time equiv calculated) £60,00011.3% based on £60,000 WTE

16 Independent financial advice only for BMA members 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

17 Independent financial advice only for BMA members 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_As sessment_Notes_2012-13_.pdf

18 Independent financial advice only for BMA members 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

19 Independent financial advice only for BMA members How are your pension benefits calculated? – Officer vs Practitioner

20 Independent financial advice only for BMA members 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

21 Independent financial advice only for BMA members What are the key differences? OFFICER  Salaried scheme – 1/80 th or 1/60 th 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

22 Independent financial advice only for BMA members 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

23 Independent financial advice only for BMA members How does dynamising work?  As a qualified GP your pension is now based on your career average earnings  This is revalued each year by CPI + 1.5% to keep up with inflation  This is called dynamised earnings  The total of each years dynamised earnings are added together  The resulting total lifetime earnings is multiplied by 1.4% to give you an annual pension  Any officer service is incorporated to calculate your final pension at retirement.

24 Independent financial advice only for BMA members Will the Recent Pension Taxation Changes effect you?  Annual Allowance reduced from 6 th April 2011 to £50,000 -This will reduce further to £40,000 on 6 th 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

25 Independent financial advice only for BMA members 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 6 th April 2014  Tax is charged on any excess at your marginal rate

26 Independent financial advice only for BMA members Your NHS Sick Pay entitlement What will you receive and when?

27 Independent financial advice only for BMA members Sick Pay Benefits – Hospital doctors or GP Trainees ServiceFull payHalf pay 0 – 4 months1 month- Next 8 months1 month2 months 1 year2 months 2 years4 months 3 years5 months 5 years +6 months

28 Independent financial advice only for BMA members 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

29 Independent financial advice only for BMA members Ill Health Retirement Pension (IHRP)  From 1 April 2008 there has been a two tier system dependent on the severity of the condition or illness -Tier 1 – assessed as being unable to undertake current duties -Tier 2 – assessed as being unable to undertake any regular employment (i.e. unable to undertake current duties AND could not do any other job across a general field of employment to the same extent as they were undertaking their own job)

30 Independent financial advice only for BMA members 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

31 Independent financial advice only for BMA members 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?

32 Independent financial advice only for BMA members 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

33 Independent financial advice only for BMA members Whilst these benefits are excellent will they be enough? Let us consider the ‘what ifs’

34 Independent financial advice only for BMA members The Foundations of Financial Planning

35 Independent financial advice only for BMA members 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 AND What happens when your NHS sick pay ceases?

36 Independent financial advice only for BMA members Income Protection  An ill health pension is payable only if you are PERMANENTLY unable to work  What is the probability of being able to prove this?  Considered the most essential of all financial planning tools -Guaranteed to pay out until your normal retirement age, your return to work or your death -Can provide benefits on an ‘own occupation’ basis -Can provide the security of index linked guaranteed premiums -Have you had a significant wage increase or other change in circumstances since you took out any existing cover? -As a Sessional GP will your existing cover pay you at the appropriate time  We will discuss appropriate levels of income protection taking into consideration your opinions and thoughts TIME TO REVIEW?

37 Independent financial advice only for BMA members 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?

38 Independent financial advice only for BMA members 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

39 Independent financial advice only for BMA members 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

40 Independent financial advice only for BMA members 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

41 Independent financial advice only for BMA members European Gender Directive  New legislation has been introduced  Implemented from December 2012  No longer able to determine premiums based on gender risk  ENSURE YOU REVIEW

42 Independent financial advice only for BMA members Mortgages

43 Independent financial advice only for BMA members Finding the Right mortgage  We can guide you through the minefield  Assistance with budget planning  Affordability assessed  We understand how your income can fluctuate -We can ensure lenders understand the nature of your work  Guidance as to the most appropriate deals on the market -Even if this means our advice is to apply directly to the lender  Specialist protection advice  Decision in principle certificate provided

44 Independent financial advice only for BMA members BMA Services in association with London & Country Mortgages

45 Independent financial advice only for BMA members Once the financial foundations are protected? We can consider building a stable and secure future

46 Independent financial advice only for BMA members 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

47 Independent financial advice only for BMA members How do we get paid?  Remember the initial meeting is without obligation  Product charges  Fees  Combination of the Two

48 Independent financial advice only for BMA members Your views are important

49 Independent financial advice only for BMA members Questions?

50 Independent financial advice only for BMA members Important Information If 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.


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