by Laurence Slavin, Partner
Visited a high earning GP today. Still in his 40s, he has already exceeded his lifetime allowance, and has an annual allowance tax liability every year.
So why, I asked him, has he taken no action. Is it because he is committed to get the maximum NHS pension at retirement or is it something else?
Turns out it is a mixture of inertia and confusion. Having met a financial adviser and attended a course on pensions and financial planning – he was more confused than ever – and guess what – these are extremely complex issues! Financial advice – like all good advice is not inexpensive, the adviser will need to know a complete financial picture of the client, to know their future plans, to review protection, investments, retirement etc and that takes time and has a cost.
Many clients just want advice about their pension, but quite rightly, financial advisers don’t like to give advice about a single issue in isolation.
But what about information? Is it possible or sensible to give information for the GP to make their own decisions?
So we talked about pensions, not to give advice, only information. But my GP client should be clever enough to hear the information and consider the options… It is a fine line between advice and information but one that is possible to tread.
We discussed that being out of the NHS pension scheme for a complete year gives an exemption from the annual allowance. If the GP leaves the scheme and returns in a few years time, the GP can use the annual allowance unused in the previous three years. Leaving the scheme for a few years slows down the growth for the lifetime allowance. If the GP leaves the scheme they lose the benefit of the death in service benefits – but assuming reasonable health, term assurance to age 60 should provide the same cover cheaply.
Pensions and the related tax problems have become so much more complicated in recent years, meetings with clients in the past hardly ever touched on pensions, but now they take up a significant part of our discussions.
As always, there is no substitute for good advice, but good information can be helpful too.
This article was written by Laurence Slavin, a partner at Ramsay Brown who specialises in the finances of Primary Care and GPs. He can be contacted at email@example.com or 020 8370 7710