NHS & FRONTLINE STAFF – COVID19

TODAY’S BLOG

NHS & FRONTLINE STAFF COVID-19

I came across a good article (26/03/2020) by Moira Warner, a manager at Royal London. I have made some minor alterations, but otherwise this is a piece not written by me. I am therefore thankful to Moira and Royal London and take responsibility for its reproduction, noting that the article has the usual social media sharing functionality anyway.

As the volume of overtime undertaken by frontline NHS staff increases exponentially in response to the Coronavirus crisis, we think an update on the pension issues potentially impacting doctors is timely.

CLINICIANS AND THE TAPERED ANNUAL ALLOWANCE

Changes to the tapered annual allowance announced at the March 2020 Budget and expected to lift all but the highest paid out of the “taper trap” are due to take effect from 6 April 2020. In view of the impact the exceptional amount of additional shift work is having on the threshold income of healthcare professionals right now, it’s worth remembering the interim measures put in place for clinicians who may face an annual allowance tax charge in relation to tax year 19/20.

In England & Wales, NHS employers will pay clinicians’ annual allowance charges incurred in 2019/20. This is achieved by the employer making a contractually binding commitment to “fully compensate” the individual for the impact on their retirement income of a “scheme pays” deduction.
In Scotland, NHS staff have been given the option of taking the value of their employer’s pension contribution as an addition to basic pay.

AWAITING CONSULTATION

We’ve not yet seen a Government response to its 2019 consultation on increased flexibilities for the NHS pension scheme, although the Chancellor has confirmed that proposals to allow senior clinicians to receive extra pay in lieu of pension contributions will not be taken forward.

It may be that the dust gets brushed off some of these previous proposals, if it turns out that the overhauled tapered annual allowance doesn’t go far enough to protect the most dedicated NHS staff working the longest hours from an annual allowance tax charge.

NHS RETIREES RETURNING TO SERVICE DURING THE OUTBREAK

In a widely-anticipated move, the Government is encouraging retired health and social care professionals to return to the NHS to join the fight against Covid-19. In order to prevent post-retirement employment having disadvantageous consequences for the pension income of such individuals, emergency amendments to NHS pension regulations have been tabled.

These form part of the Coronoavirus Bill 2019-21 which received Royal Assent on 25 March 2020. The amendments (which the Government will have the power to implement immediately or retrospectively) apply across the United Kingdom and have 3 effects:

The pension income of special class status holders who return to NHS employment won’t be abated (suspended). Special Class status holders are nurses, physiotherapists, midwives and health visitors in post on or before 6 March 1995 and Mental Health Officers (MHO) with at least 20 years’ MHO experience and in post on/before 6 March 1995. The wider pension abatement rules remain unchanged. In particular this means that individuals who retired “in the interest of efficiency of the service” could still have their pension suspended on return to work.
The pension income of 1995 Section NHS members who return won’t be suspended if they work more than 16 hours per week in the first calendar month following retirement.
Members who have flexibly retired using the NHS “draw down” facility will not be required to maintain a reduction in their pensionable pay of a minimum of 10%

There is no proposal to amend regulations prohibiting pensionable re-employment of 1995 section retirees. Any clients who have retired and drawn 1995 section benefits will therefore be able to return to the NHS, but will not be able to resume pensionable employment under the NHS pension scheme. Employers will need to enrol returners who are eligible workers into an alternative pension scheme.

Please also note that these measures are temporary. The Government has stated that a six month notice period will be given to staff and employers before they are disapplied.

DEATH BENEFITS

Recent social media chatter suggests there’s concern amongst health care professionals who have made taxation-related decisions to opt out of the NHS Pension Scheme, that their loved ones will no longer be entitled to any scheme benefits in the event of their death. So clients need reassurance that this is not the case.

Although the loved ones of individuals who’ve opted out will no longer be entitled to death in service benefits if the deferred member passes away, they remain entitled to death in deferment benefits. These include a lump sum death benefit and both eligible adult survivor’s and eligible children’s pensions.

Further details on calculation of these benefits can be found in the 1995/2008 and 2015 NHS pension guides for England and Wales – as well as the guides for Scotland and Northern Ireland.

If you wish to consider additional life assurance cover please get in touch. Given the current context, applications for minimal levels of cover, before requiring medical underwriting would likely be the most prudent approach.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

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GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Mill Cobham Park Road, COBHAM Surrey, KT11 3NE

Email – info@solomonsifa.co.uk Call – 020 8542 8084

7 QUESTIONS, NO WAFFLE

Are we a good fit for you?

Take Survey

PRIVACY POLICY | DATA PROTECTION

NHS & FRONTLINE STAFF – COVID19Dominic2025-01-21T16:04:36+00:00

Public Sector Pay Rise

Solomons-financial-advisor-wimbledon-blogger

Public Sector Pay Rise

The Treasury announced yesterday that various people will be getting an increase in their salaries. This is due to come into effect in October 2018. This is heralded as the biggest public sector pay rise in quite some time, which is probably the case, but that is largely due to the fact that most have had their salaries frozen or pegged below inflation as a result of the austerity measures. Remember that austerity was brought in to reduce the amount of overspending (spending exceeds income) each year.

Anyway, whatever your political persuasion, finally around a million people will be taking home a larger salary… or will they? Well most probably will. However some higher earners are more likely to be exposed to the problems of the annual allowance. This is now about pensions, but directly impacts income.

Since the start of the 2016/17 tax year, the annual allowance has become more complex. Those earning over £150,000 in all forms of income (rent, earnings, savings interest etc) have a reduced annual allowance (the amount that they can put into a pension). The standard annual allowance is now £40,000 but this is “tapered” down to just £10,000 at a rate of £1 for every £2 over £150,000. There will be some, perhaps many that say, something to the effect “you have lots of money, so what if you cannot pay more into your pension”.

NHS Pension, Teachers Pension and similar..

These big State pensions were (and still are) brilliant for most people. You get a guaranteed income for life, that rises broadly in-line with inflation. Its based as a proportion of how long you are an employee and member of the pension and your final salary. The original NHS pension was a 1/80th scheme. You work say 36 years (24 to age 60) and suppose you are a top of your game NHS Consultant, earning around £120,000 from work with the NHS, then you would expect 36/80 (45%) of your final salary (hence the term) for life. That’s £54,000 a year in this example.

However, all these schemes became too expensive, successive Governments mucked up the calculations, getting members to contribute more to the pension and also changing the terms. Moving the goalpost further to 65 and then later to the State Pension Age (SPA). They also changed the rate at which the pension builds up from 1/80 and removed the lump sum as standard.

So what?

Well, if you are a high earner or have other sources of income that push you over £150,000 you start to have a reduced annual allowance. As no Government in recent history has been truly keen on simplicity or transparency, matters get complicated. So despite the term “annual allowance” this only applies to investment based pensions, not Final Salary (sometimes called Defined Benefit) pensions. No. These have a different sum. I won’t go into great detail, but in essence, the calculation looks at how much your pension has increased by over the course of the tax year. So just suppose you are in the old NHS scheme still (if over 50 that is entirely possible). You earn say £110,000 from the NHS and have Private Practice which adds considerably more. Your pension increased by 1/80th or £1,375. The way you work out your annual allowance “value” is this figure x16 and then add the increase in the lump sum value. So that makes £26,125.

OK, it isn’t quite this simple – you actually calculate the opening and closing values of your total pension, make an allowance for the Government approved rate of inflation, subtract one from the other and hey presto, there is your “pension growth”. So now that you have a pay rise half way through the tax year (October)… your final salary will be higher on 5th April, so will the sums.

Exceeding the Annual Allowance?

Well, if you do, you can use up any unused allowances from the 3 prior tax years. If not, any amount above your tapered annual allowance, or even standard one, will be taxed at your highest rate of tax. So you pay tax on money you have not had… quite a lot. This has got more financially engaged Consultants wondering if they should stay in the scheme at all. Kerboom…

Oh and just for good measure, you are responsible for reporting your excess to HMRC under self assessment rules. Naturally this really requires lots of advice and this is one area where data is needed. So all those payslips you’ve been keeping are needed. All the Total Rewards Statements (NHS) are needed and to keep the theme going, if you are in the NHS, you really ought to request a Pension Annual Savings Statement (PASS)… which you will need every year going forwards, or until the rules change.

So yes, you have a pay rise….

Dominic Thomas
Solomons IFA

Email me to get in touch

Public Sector Pay RiseDominic2023-12-01T12:17:56+00:00

Financial Planning: Should I do my own financial plan?

Should I do my own financial plan?

You are good at what you do for a living. You are successful by most standards and are keen to keep developing your own skills and capabilities so that you can drive your business or professionalism forward. You know your way around a spreadsheet and understand what a balance sheet is, in fact when it comes to the daily management accounts, you have got it licked. So its not unreasonable to assume that you can handle your own financial planning. After all, why spend money to get a financial planner to tell you what you already know?

Admittedly, this isn’t something I hear a lot, but that doesn’t mean that it isn’t being thought or said by those that don’t make a bee-line for my front door. Most people are capable of learning to do their own financial planning, in the same way that most people could learn to be their own physician. Most of the time we are perfectly able to self-diagnose and take over-the-counter medicine for minor ailments without need to bother the GP. However there are moments when we should seek qualified advice and sometimes that will result in being referred to a specialist. Financial planning is no different.

Most people are perfectly able to manage their day-to-day budget and build some savings. Many are quite comfortable with completing tax returns for the straight-forward stuff. However a financial plan is not about the ordinary day-to-day “stuff” it is about helping you get what you want from your life by assessing what you have, what you need to have and helping you get there as efficiently and effectively as possible. There are lots of moving parts to a financial plan and some come and go, depending on the legislation and rules of the day. We aren’t talking about a simple goal “I want £200,000 by the end of 2025” but a complex interaction between your values and reality.

In sport, even the top sportsmen and women have a coach. What does this tell us? that there is always room for improvement? a problem shared? someone to motivate? provide discipline? the list is probably fairly lengthy – but having a supportive “partner” critique and help improve is how I approach this. Because “money” is something we all handle, (for many of our clients at a very “high level”) we can often think that financial planning must be easy… a bit like painting by numbers. Select your own financial products that appear to be the right ones, pick the top performing or top selling funds and you’re done right?

I genuinely believe that most people are capable of doing their own financial planning, but with the caveat that they need to put in the hours of study acquiring the skills and knowledge required – like anything else. However even with these skills and knowledge, one vital ingredient is also required – experience. Take the example of being a surgeon – knowledge is one thing, but on-the-job experience is vital and indeed if you were having surgery, you’d want someone that did this pretty much all day, each day, each week, not someone that does the occassional surgery. Things that are important, that matter, need an expert hand.

Above is an image of some restoration work (on the right) carried out on an ancient mosaic (the left image is the original) held by the Hatay Archeological Museum in Turkey. This recently became widely reported in the media due to the obvious flaws in the “restoration”. Unfortunately, those doing the restoration are blaming others. The question for you – is it good enough?

Dominic

Financial Planning: Should I do my own financial plan?Dominic2023-12-01T12:40:09+00:00

Retiring Doctors and GPs?

Lately I have found myself between a rock and a hard place when advising my medical clients. Through no fault of their own, many long-serving Consultants are being punished due to poorly thought through rules about the Lifetime Allowance and Annual Allowance. Whilst on the one hand they are “lucky” to have large pension funds, that are by comparison “brilliant” the fault of successive Governments to fail to do their sums is hardly their fault. Indeed if ever there was an appropriate use of the term “moving the goalposts” it is surely fitting for what has happened to public sector pensions, particularly the NHS Pension Scheme, which was revised in 2008 and has now morphed into the 2015 Scheme (from the start of this month).

The changes have meant that members have to guess when they might best retire… in some specialities that is “a challenge”, most have to pay more, work longer and accrue less, whilst, (if reports are to be believed) having to cope with a greater workload, politically motivated “targets” and an under resourced organisation.

As a result of blown 2012 Fixed Protection and further reductions to the Lifetime Allowance, many of those that I work with are somewhat fed up with the powerlessness that they feel in relation to their pension rights. I cannot speak of widespread disatisfaction, but certainly those that I know within the medical community (quite a number) are “cheesed off”. The way benefits are calculated are ludicrously complicated and often mean that extra taxes are payable – through no fault of the doctor – simply by being in the scheme and having an increase in pay which is out of sync with the defined limits. I’m not talking small taxes here – but excess amounts that are deemed to have been paid as income, even though this is not the case in reality (it isn’t paid as income)…

According to the BMA, a poll of over 15,000 GP’s indicated that 34% of them expected to retire within the next 5 years. Statistics out of context can be used to support any argument, so a headline such as this one needs some unpicking.

According to the GMC, there are about 60,000 licensed doctors on the GP Register for the whole of the UK. The GP register has been around since 2006 and requires that all practicing GPs keep their license and records up to date. This figure is for the whole of the UK and does include some possible double-counting as some specialists are GPs and vice versa. In England there are 40,584 GPs and according to data published last month by the Health and Social Care Information Centre (HSCIC), for the first time there are now more practicing female GPs (20,435) than male GPs (19,801). In any event, a suvery of 15,000 is therefore a survey of about 37% of the entire workforce by headcount… which is a significant survey, one might say a very solid survey, certainly when considered as a percentage of the relevant population – unlike the current political polls or those TV adverts for women’s products that claim high rates of satisfaction (so small that it is questionable if the people conducting the survey actually left their office building)… so this survey, unlike some, is rather “worth it”. Of course, not all GPs work full-time, the figures are a headcount, not a precise allocation of full-time GPs, the full-time equivalent number of GPs is 36,920. If trainees and retainers are excluded, then the full-time equivalent is 32,628.

By way of “hard facts” here are some NHS statistics to consider, I have taken these from the HSCIC report, which frankly could make the statistics much clearer… anyway…

1,387,692 Total NHS workforce (1,187,606 FTE)

of which

701,872 are professionally qualified clinical staff (623,050 FTE)… 50.5%

42,733 Consultants (40,443 FTE)…. 3.0% of NHS staff

55,079 Hospital Doctors (53,786 FTE)…. 3.9% of NHS staff

37,078 Managers (35,164 FTE)….2.6%

36,920 General Practitioners (32,628 FTE)… 2.6%

377,191 Nurses, including GP nurses (328,577 FTE)….27.1%

The problems of staffing within GP surgeries looks set to continue and frankly, if politicians contrinue to play havoc with the pensions (Lifetime Allowance and Annual Allowance nonsense) of doctors and nurses, they may well also be considering earlier retirement. Future PM, you have been warned…

Dominic Thomas

Retiring Doctors and GPs?Dominic2025-01-21T15:50:49+00:00

Speaking up for Annuities

OK, let me be clear. I have long wished that the compulsion for people to buy annuities would be abolished. It seems that sometimes wishes do come true…as the Chancellor did precisely this in his Budget last year and on 6th April 2015 the new rules begin. However the general level of financial knowledge is very poor in this country… little wonder as its a dull subject for most people and full of very unhelpful jargon… and some maths… the perfect ingredients for neglect.

Annuities aren’t “bad”

Annuities aren’t good or bad. They are simply a financial product, designed to provide a guaranteed income for life. It is very true that annuity rates have fallen heavily over the last 20 years. This has nothing to do with “greedy insurance companies” but is due to low interest rates, low inflation, low gilt yields and increased life expectancy.

So when I came across an item from the Telegraph “I spent £100,000 on an annuity” I was drawn to it…. well.. thought I should read it anyhow. This is the sad story about Mr Archer, who following his purchase of an annuity decided to see his doctor, who suggested he has a scan and, as it turns out, had a large tumor growing and therefore posed some serious questions about life expectancy.

Now, we have probably all made decisions that we would like to reverse with the advantage of hindsight, but in truth the only real “mistake” made by Mr Archer was to fail to see his doctor and get a full medical prior to buying his annuity. Armed with such information his adviser would probably have provided him with different options.

A clean bill of health…

Normally in the world of financial services, you want a nice clean medical history… relevant when applying for any sort of financial protection (life assurance, critical illness cover, income protection and even private medical insurance). However when it comes to annuities you are more likely to have better options if your health looks… well not so good. In both instances you must be entirely honest, but quite obviously it would make sense to have a medical before an annuity application is made. This could lead to being offered an “enhanced” annuity (sometimes called an “impaired life” annuity). In short, meaning that your life expectancy is below average, so you are offered a higher income… perhaps 30%-40% more. Many retiree’s will qualify for an enhanced annuity.

You cannot change history… but can alter the future

This is not the fault of the annuity provider, or indeed the product. It is sadly a case of “if only I’d known”. Whilst some clamour for annuities to be unpicked, I think this very unwise. The new rules result in greater flexibility, but there are serious concerns that some will simply blow their pension. Indeed just because a doctor or insurer says you have a reduced life expectancy, does not mean that its a certainty… its all about likelihood and probability. The only certainty you can give yourself at retirement, is to book a medical with your GP first, then get a decent financial planner to outline your options. Please learn from the very understandable mistake that Mr Archer made and don’t make the same one. None of us are immortal, with age comes greater health problems… death is not a question of if, but when.. so please add some advantage to your hand.

Dominic Thomas

Speaking up for AnnuitiesDominic2025-01-21T15:51:07+00:00

What Doctors can teach investors

Today’s guest blog is from Andrew Webb, who is a writer, marketing and communications expert. He currently works for Dimensional and used to work for Fidelity. Here he highlights why at Solomons we use evidence based investing, not the latest fad. You may know that I advise quite a lot of medical consultants and I imagine you will find his topic title amusing.

What Doctors can teach investors

Newspaper reporters who interview centenarians on their landmark birthday cannot seem to avoid the temptation to ask how they have lived so long. Because most people haven’t the faintest idea how they have reached 100, they tend to attribute their good health to something like a weekly tea dance.

Medical professionals will say that the most likely reason for a long life is a combination of favourable genetic and environmental factors, access to reliable medical care and a healthy dose of good luck. It follows, therefore, that anyone serious about improving their chances of a long life is better off seeking the credible advice of a doctor, not taking speculative tips from a pensioner.

But these facts rarely get in the way of a good story.

The treatments doctors use to keep us healthy are tested by a process of empirical research and clinical trials. Considering health and wealth are both high on the list of priorities for many people, it is a shame that the investment industry is typically less rigorous than the healthcare industry.

Most people turn to the investment industry to help them research their investments. This is the same as asking a pensioner how they have lived so long. The industry’s self-analysis can range from outlandish to plausible, but it will almost never be based on scientific study.

We take a different approach; one that is based on scientific rigour and hard evidence. This approach identifies the sources of investment return and we aim to deliver them to you. This gives us confidence that we understand why your investments behave the way they do and why we are more able to design investment portfolios that suit your needs.

Andrew Webb

What Doctors can teach investorsDominic2023-12-01T12:39:04+00:00

Public Sector Pensions – Goalposts Moving Again

2008: The Deal – Schachter

Public Service pension schemes are undergoing a huge amount of change at present. As you may know I advise many Consultant Doctors as well as quite a few people working within “public service”. Yesterday, the Government issued its Public Service Pensions Bill. This may seem like yet another cost cutting exercise, but I have serious concerns about it. In essence we all know that public service pensions are very good and most of us would be lucky to have one, however that does not mean that because we don’t, those that do need to be reprimanded, which is frankly what it looks like. There is a fundamental change to the way the schemes operate, switching from a final salary basis to a career average basis. This will almost certainly mean lower pensions for most members of the scheme. In addition the member contribution is also increasing signficantly, this is on the back of several “shake ups” previously.

Those within 10 years of retirement (generally aged 50+) will not be impacted by the new proposed rules. However everyone else is likely to pay more, get less and retire later. Not exactly a winning combination if you are trying to incentivise a workforce. I’m in the process of properly reading the Bill and will be outlining further thoughts in time. However, envy should have no part to play in policy making and I am concerned that this sort of goalpost moving is exactly the sort of ill conceived idea that makes normal, moderate people give up on the political classes, creating an unhealthy dynamic, which in a European context has resulted in some fairly dire consequences.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Public Sector Pensions – Goalposts Moving AgainDominic2023-12-01T12:22:48+00:00

Medics See-Through Outsourcing.

1963: The Man With The X-Ray Eyes

The medics amongst you may be interested in the changes that seem to taking hold of radiology departments. This is not a new story and I have talked at length with clients about the impact of the internal changes within the NHS due to outsourcing of services and and in some instances a potential reduced perceived need for certain Consultants.There’s a fairly pithy blog that I follow by a doctor which often points to the growing privatisation of NHS services. Retired Consultant Bob Bury writes an interesting piece in Hospital Doctor today. As you will be aware, I advise quite a number of Consultants and GPs who are all at the receiving end of a taxation assault against them, which I believe to be largely due to the last Governments inability to do the maths on the Consultant Contract and GP Contract. I have never met a doctor that is in pursuit of money, even those with very large private practice incomes are very “patient focused” the money just kind of follows. Of course if you are ever unfortunate enough to need their skills, then you really appreciate the training and experience that they have gained over many years.

Saving money (by buying cheaper) is not always a great way to operate. Nobody wants to be ripped off, but equally we know that cheap does not equal quality – just look at the row between Virgin Trains and the Government at the moment.

Medics See-Through Outsourcing.Dominic2023-12-01T12:22:48+00:00

Permission To Carry On Doctor

1967: Carry On Doctor – Thomas

Doctors have to be revalidated. In other words, they have to regain GMC approval to practice. This is a result of the Government’s decision to have a revalidation process beginning from the end of this year. I understand that the revalidation will need to be reviewed every five years, which whilst being an irritation to many already over-worked doctors, will be a relief that at least it will not be an annual process. A part of the RDR (Retail Distribution Review) is that advisers must effectively attain an annual Statement of Professional Standing certificate, provided by one of a few organisations licensed as a provider.

Doctors will get six months notice of their revalidation dates. The GMC have advised that revalidation dates for currently licensed doctors would likely be within the next three years to March 2016, with this possibly stretched over a five-year period for trainees.

Whilst there is clearly merit in ensuring that skills and competence is maintained and kept up to date, one does begin to wonder if we have simply created more form-filling and form vetting jobs without actually ensuring any significant improvements. This isn’t just an issue for doctors or financial advisers, similar principles are being adopted in many fields. I suspect that the cost of all this validation is fairly significant. I have tremendous respect for doctors, but I really don’t believe that revalidation will make any difference to the confidence I have in them and I imagine that my SPS will not provide greater confidence in me.

Permission To Carry On DoctorDominic2023-12-01T12:22:32+00:00

Doctor, Doctor…I Feel Like the BMA Aren’t Listening

1939: The Return of Doctor X

There is more woe for doctors that are members of the BMA. The union organisation had a huge amount of support from its membership who voted overwhelmingly in favour of industrial action due to reforms of the NHS pension scheme. However, the BMA seem to have backed down and decided not to take any action. There are a considerable number of doctors who are now fairly fed up that not only did the BMA get a decisive “yes” in their online vote, but this was also approved at its Annual Representative Meeting. So many doctors are feeling as though they are not being listened to by either the BMA or the Government.

The NHS Pension Scheme is a really good final salary scheme, but it has undergone some serious changes, which mainly result in increased costs for its members, particularly Consultants. There are many of us that are envious of having a scheme like the NHS, but changes to employment terms and conditions is no small matter and many Consultants are paying well over 10% of their income towards the NHS Pension scheme and many are paying 50% tax and some will even get additional tax charges for remaining in the pension, despite this being in their interests to do so. Advice to leave the NHS Pension scheme should be considered very carefully indeed.

Doctor, Doctor…I Feel Like the BMA Aren’t ListeningDominic2023-12-01T12:22:24+00:00

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