Transcript Independent financial advice only for BMA members

Independent financial advice only for BMA members
Sessional GP’s
Understanding your pension and its benefits
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
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
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Areas of advice
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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.
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Understanding Your NHS Pension
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The NHS Pension Scheme (1995
section)
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Key Facts
 Final salary scheme for employed staff (officer)
 1/80th pension accrual rate, 3/80th lump sum
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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
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The NHS Pension Scheme (2008
Section)
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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
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What are the proposed public sector
pension scheme changes and how will
they affect you?
Expected Implementation date
1st April 2015
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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
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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
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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
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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?
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Your personal contributions
Pensionable pay in 2012/13
Contribution rate in 2013/14
Up to £15,431.99
5%
£15,432 - £21,387.99
5.3%
£21,388 – £28,823.99
6.8%
£26,824 - £49,472.99
9%
£49,473 - £70,630.99
11.3%
£70,631 - £111,376.99
12.3%
£111,377 and over
13.3%
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Portfolio careers – contribution example
Post
Income
Calculation
method
Value
Tier
3 Sessions
salaried GP
£21,000
Practitioner
£21,000
9% based on
£30,000
Appraisal Work
£5,000
Practitioner
£5,000
9% based on
£30,000
GP Locums
£4,000
Practitioner
£4,000
9% based on
£30,000
2 Sessions
Hospital
dermatology
£12,000
Officer (whole
time equiv
calculated)
£60,000
11.3% based
on £60,000
WTE
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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
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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
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New rules for locum – ‘employer
contributions’
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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
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How are your pension benefits
calculated? – Officer vs Practitioner
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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
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What are the key differences?
OFFICER
 Salaried scheme – 1/80th or
1/60th 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
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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
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Will the Recent Pension Taxation Changes
effect you?
 Annual Allowance reduced from 6th April 2011 to £50,000
- This will reduce further to £40,000 on 6th 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
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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 6th April 2014
 Tax is charged on any excess at your marginal rate
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Your NHS Sick Pay entitlement
What will you receive and when?
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Sick Pay Benefits – Hospital doctors or GP
Trainees
Service
Full pay
Half pay
0 – 4 months
1 month
Next 8 months
1 month
2 months
1 year
2 months
2 months
2 years
4 months
4 months
3 years
5 months
5 months
5 years +
6 months
6 months
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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
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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
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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?
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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
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Whilst these benefits are excellent
will they be enough?
Let us consider the ‘what ifs’
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Protect your most important financial asset
YOURSELF AND YOUR ABILITY
TO WORK
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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?
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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?
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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
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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
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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
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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
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How do we get paid?
 Remember the initial meeting
is without obligation
 Product charges
 Fees
 Combination of the Two
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Your views are important
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Questions?
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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.