Back in 2015, the most recent revision to the NHS pension scheme took place, with the majority of GPs being obliged to become members of a revised scheme.
The newer scheme has, for example, a higher retirement age, no lump sum as standard, and is based, in very simple terms, on an aggregation of each year’s annual earnings divided by 54.
Any GP with a date of birth of August 1965 or later was immediately transferred to the new scheme from 1 April 2015, with a gradual transition for those born between April 1962 and August 1965. Those born before this date remained in the older scheme.
In practice, this results in many GPs having two separate pension pots, one in the older scheme subject to those rules, and another subject to the new scheme rules.
So, you are likely to have part of your pension you can take at 60, and some perhaps as late at 68.
There are many GPs who do not even realise that they have been members of the newer scheme and get quite surprised when it is pointed out that it cannot all be taken at age 60.
A recent legal case (the McCloud judgement) upheld the charge that this effectively discriminated against younger members, and a public consultation has been held to come up with a way forward.
Although the detail is yet to be released, what is most likely is that there will be another new scheme from April 2022, which all current scheme members will be required to join.
Where a member commenced NHS pension membership before March 2012, and has had to transfer to the newer scheme, then for the period from 2015 to 2022, the member will effectively be able to nominate whether their pension benefits will be accrued in the older 1995 or 2008 schemes, or remain in the 2015 version.
This will have far reaching effects on GPs, not least completely changing previously calculated tax annual allowance charges, as well as fundamentally altering likely pension benefits.
There has been a feeling amongst GPs for some years that their pension will take care of itself and that the relevant bodies are on top of its administration. From our years of experience, we know this is not the case and it is vital that you take conscious steps to ensure that you know your position.
We have letters of authority in place with NHS pensions for our GP clients so that we can deal with them directly on your behalf. We don’t shy away from giving business and tax advice and have a working knowledge of all sections of the NHS pension scheme. We also work closely with a close network of specialist IFAs to bring enduring benefit to our clients.
We can guide you through this complex area to assess exactly where you are and how the new measures may affect you. Contact our experts for further advice in this area.
Moore Scarrott are currently working with PCC to run workshops about how these pension changes may affect you. More details can be found at https://www.pccevents.co.uk/2523
This article was written by Chris Clark and Rob Glentworth, specialist medical accountants at Moore Scarrott Healthcare.