If you are considering fixed protection then time is ticking – From April 06 2012 the Lifetime Allowance will reduce from £1.8m to £1.5m.

This will have significant impact on clients with pension values above the Lifetime Allowance.

To claim fixed protection you will need to not make any contributions to a money purchase arrangement after 2012, not set up a new arrangement unless you are transferring to it and your application needs to have been made by 05 April 2012.  In addition, special regard needs to be taken about the benefits built up in the NHS Pension Scheme.

So if this is an issue, and you would like to talk, call me on 01204 663904 or email Phil@white-well.co.uk

I recently approached HMRC in relation to calculating how Added Years affects the benefits.

This was their response.

“The purchase of added years will presumably mean that the member’s pension entitlement at the end of the pension input period is higher than it would have been if they had not made the purchase. Consequently this would mean that the pension input amount for the period would be higher as it would include the additional benefits. You will need to contact the pension scheme to see how any contribution would affect the members benefits under the scheme.”

As you can see they were pretty unhelpful.

I have subsequently found out how this calculation works. It depends on the number of years being purchased and the time period over which the purchase is taking place. An adjustment factor is then used to deal with the accelerated accrual. So four added years purchased over 20 years would give an adjustment factor of 1.2.

If you are concerned about how your NHS pension benefits are affected by the Annual Allowance why not get in touch 01204 663904 or phil@white-well.co.uk

Fixed Protection – HMRC have set out their guidance and the forms needed to apply for fixed protection.

Do you need assistance with getting fixed protection in place before the 5 April 2012 deadline?

To recap, fixed protection protects your pension benefits at the current lifetime allowance level (£1.8million) rather than at the lower lifetime allowance (£1.5 million) from 6 April 2012 onwards.

It is relevant if you do not intend to draw benefits before 6 April 2012.  If you are continuing in the NHS Pension scheme beyond April 2012 it is worth checking whether this valuable benefit is relevant to you.

So if you need advice on fixed protection and the lifetime allowance, please contact me 01204 663904 or email phil@white-well.co.uk

I am currently assisting a Dr client of mine on lifetime allowance matters and I had the novel idea of approaching the NHS Pensions Agency to see if they could assist me.

At the time we believed he had exceeded his permitted benefit accrual and would lose his enhanced protection, so naturally we wanted to know, so that we could apply for fixed protection in good order.  Who better to tell us than those administering the scheme. Wrong.

This is the responseI got (some time later):

“I can confirm that the NHS Pensions does not get involved with protecting pension rights from
the pension charges.  At retirement we will send Dr X his pension award letter with the percentage on how much his pension is over the Lifetime Allowance rules.

Regarding protection of his pension he will need to contact HMRC for further details.”

I am still awaiting a response to my next later asking whether they felt they owed my client a duty of care to assist in the matter.

So we are left with not knowing before the event whether enhanced protection applies or not.  I have developed a number of spreadsheets which help me to advise my medical clients on both lifetime allowance and annual allowance matters.

If you would like some assistance, please get in touch on
01204 663904 or email me phil@white-well.co.uk

I am receiving an increasing number of enquiries from GPs, doctors, dentists and consultants looking to opt out of the NHS pension scheme and take fixed protection to defer benefits until normal retirement.

When applying for fixed protection it is important to understand the way that NHS pension benefits escalate in deferment as this will have a major impact on whether the benefits are protected or not.

When you resign from the NHS scheme, your benefits are calculated to the point you leave the scheme, using pensionable salary to that date, and a pension figure calculated.  This pension figure then gets cost of living (CPI) increases up to the date the point at which the pension is ultimately taken.

In theory, if the benefits grow by CPI and the fixed protection allows benefits to grow by CPI, then everything’s ok.  I am a little wary, however, that protection may still apply.  HMRC’s definition of CPI, and the dates it is derived from, may (and have in the past) differed from NHSPA’s version of CPI.

So when considering fixed protection and opting out of the NHS pension scheme be careful about how benefits might escalate in the future.

If you are a GP, doctor, consultant or dentist and would like guidance on how your NHS pension benefits are affected, please get in touch on 01204 663904 or email phil@white-well.co.uk

It seems a lot of senior medics are currently wrestling with the issue of whether to remain in the NHS scheme given the Hutton review, increasing costs and taxation and the dual issues of the Annual Allowance and the Lifetime Allowance going forward.

It could be tempting to come out of the scheme without considering the implications.

One thing to bear in mind is that despite all the changes which seem to be coming along like London buses at the moment, the NHS scheme still remains an excellent scheme.  The benefits are still indexed in payment at least with a measure of inflation.  In addition, the way that the NHS scheme treats the Lifetime Allowance charge is very generous.

I am currently working with a number of senior medics on their retirement plans.  For those aged around 50 serious considerations are being given to how much future tax they might pay and whether ultimately the benefits received will be worth it.  The closer to the normal retirement age clients are the easier this decision is because often the accrual is there.  In these cases it is more about protecting the benefits against the LTA.

If you are a GP, doctor, consultant or dentist and would like guidance on what to do with your NHS pension benefits in relation to the Hutton review, the annual allowance or the lifetime allowance, please get in touch on 01204 663904 or email phil@white-well.co.uk

I have just started work on two very interesting NHS pension reviews for GP doctor clients of mine both aged around 53 years old. The brief was to check what benefits had accrued to date and to review the future position of the NHS benefits against the Annual Allowance and the Lifetime Allowance.

Firstly, having ordered updated pension forecasts from the NHS Pension Agency in Fleetwood we checked the dynamisation figures and the service calculation to ensure their data was accurate. It was so no issues so far.

Next we checked how the annual allowance might affect the client. The projection for annual allowance purposes was similar for both clients. We are estimating that the growth in capital value in the 2011/2012 tax year was c.£43,000 for both. Again, there are no issues due to the annual allowance being £50,000. So far so good.

Indeed, using the new carry forward rules it would be possible to mop up approximately £48,000 worth of unused allowance from 2009/10 and 2010/11.

But before that would be advisable the position against the Lifetime Allowance needed to be checked.

Rolling the service forward to age 60 in 2018 and making certain assumptions with regard to pay and dynamisation the lifetime allowance values were both around £1.8m. Suddenly, the clients have a Lifetime Allowance issue because the Lifetime Allowance in 2012 will reduce in 2012 to £1.5m.

So, with this in mind the clients have to decide:

• When is the most optimum time to retire
• This is complicated by succession issues relevant to GP partners
• Will the Lifetime Allowance increase at some point between 2012 and 2018.
• Should I reduce the pension benefits by taking a higher pension commencement lump sum (tax free cash).
• Is the way the NHS apply the Lifetime Allowance charge an obstacle.

If you are a GP partner or doctor and would like some advice and guidance on how to make an informed choice on your NHS pension and retirement planning why not call me on 01204 663904 or email phil@white-well.co.uk

In the 2009 Budget, Chancellor Alastair Darling announced measures that could hit anybody who earns more than £100,000. From April 2010, changes to the personal allowance, in conjunction with the introduction of a new higher rate tax band, are likely to cost even those near the bottom of these earnings levels an extra £2,500 a year. Furthermore, these measures were accompanied by a move to limit maximum pension contributions, which could add to the impact for those earning more than £130,000.

Targeting high earners

The measures are designed to see those who earn more contribute more to the repayment of the UK’s extraordinary debt levels. They include:

- a reduction in the personal income tax allowance for those earning more than £100,000;
- a new 50% income tax band (from April 2011) for those earning more than £150,000; and
- limitations on the tax rebates available on pension contributions.

Taken together, these measures mean high earners need to start thinking now about how to mitigate some of their impact. There are a number of things that can be done to help but, with time running short, you should start thinking now to make the most of this opportunity.

Getting help

If you would like to find out more about the measures and start making plans to limit their effects, we can help. Whether it is through pension planning, investment advice or simply assessing your salary level and tax position, we will take a close look at your financial situation and recommend solutions tailored entirely to your needs.

Give us a call today for a confidential chat – 01204 663904

When setting up a new partnership (like any business) there are a million and one things to be sorted out before you start. A partnership agreement is often over looked but regrettably can often be needed in many instances.

A well drawn up agreement will deal with:

• How the business will be run
• Entry or exit of new partners
• Death
• Succession
• Retirement
• Valuations – property etc
• Disputes
• Other earnings
• Divorce

A recent discussion with a GP client of mine revealed that the lack of such an agreement has enabled a previous partner of his to continue to enjoy the rent & value increases of the business premises which he vacated over 15 years ago!

In the event of the death of a partner, the beneficiaries of the estate will usually be their family. They may have no experience of running a business and are unlikely to be able to contribute to it in any way. In these circumstances they will usually wish to withdraw their share of the capital at the earliest opportunity. Having partnership protection in place ensures that the family can receive a fair value for that interest.

From the surviving partners’ point of view, they will be continuing to run the business with a sleeping partner taking a share of the profits. They will be keen to ensure that they will be in a position to regain control of the business by paying the family their share of the business back as soon as possible. Partnership protection ensures they have sufficient funds to do so.

For further information on partnership agreements and protection, please contact me on 01204 663904 or advice@themedicalifa.co.uk

With a big budget deficit to plug (and without a hint of irony given their own expenses scandals) the government has now turned its spotlight on to professionals believing them to be not declaring all their earnings.

See the headline in 12 January’s Daily Mail here.www.dailymail.co.uk/news/article-1242497/Middle-class-medical-professionals-targeted-new-tax-clampdown.html#ixzz0d58v5Dtz

First up is medical consultants, surgeons, doctors and dentists. If this proves “successful” HMRC intends to target other professionals such as Solicitors and bankers.

They have proposed an amnesty to allow any untaxed earnings to be declared. This will be available for 3 months only and after 31 March they intend to be more aggressive.

Of course, you would be forgiven for thinking that this is not new. The Revenue has always had the power to open an aspect or investigate a tax matter should they wish. You may have personal experience of this or know of a colleague who has gone through this. If you do as a busy professional you will know it can be stressful, expensive and time consuming.

Perhaps an audit of your income and outgoings with a professional financial adviser specialising in your field would help.

If you are concerned about these issues and would like to discuss matters further in a confidential manner, please contact me on 01204 663904 or email advice@themedicalifa.co.uk

This comes hot on the heels of the increase personal taxation measures which come into force in April 2010, see here – www.themedicalifa.co.uk/taxation/what-the-proposed-taxation-changes-in-april-2010-will-mean-for-you