The introduction in 2016 of the tapered annual allowance (TAA), has made it very difficult for doctors to work out when they are approaching new limits for pension contributions. Many have been stung with huge tax bills, while some have been forced to stop work altogether.
The Government is consulting on proposals to mitigate the problems, and in the meantime has produced a paper showing the options that are available to doctors having to deal with pension tax bills1.
However, these options are complicated, and Quilter pension expert Ian Browne warns that doctors could end up being challenged by the taxman if they make a wrong move.
“It is reassuring that the NHS is encouraging staff to seek professional financial advice from the outset, highlighting the value that this provides to someone who is suffering at the hands of the TAA,” he says.
Navigating the pension maze
While financial advice about your NHS pension options is vital, a specialist adviser could add value in many other areas of your finances too. Every individual medical professional’s situation is different. Depending on whether you are employed by a hospital, working as a partner in a GP practice or self-employed as a locum, you will face varying challenges about how best to structure your savings and investments to achieve your goals.
These could include ensuring that your investment portfolio is in the right types of assets to pay for school fees or university fees in the short or medium term, as well as ensuring that you are financially prepared for retirement. A financial adviser can also help with concerns about protecting your family’s lifestyle in the event of unforeseen illness or death. Or you may have a worry that your family could be faced with a huge bill for inheritance tax in the future if you do not do something about it now.
A holistic approach
Above all, a financial adviser will help you see your total financial position and aspirations in a holistic way. Doctors’ finances are quite complex, so expert advice is essential to remain financially healthy.