Pulse Seminar Summary

Pensions & Personal Finance Seminar

Last month’s Pulse Pensions and Personal Finance Seminar in London saw some high profile speakers covering a wide variety of topics.

The morning sessions concentrated on the proposed reforms around the NHS Pension Scheme and increased contributions.

NHS Pension Scheme Changes

Tim Sands, Deputy Director of NHS Pension and Employment Services, traded views with Dr Andrew Dearden, Chairman of the BMA’s Pension Committee. Both put forward good arguments supporting their positions.

Mr Sands argued that increased longevity should be reflected with a longer working life and higher pension cost. In response, Dr Dearden stated that the NHS Pension Scheme had recently gone through a consultation process that had considered these factors. The process had taken 3 years and yet the current consultation period looks to be only a matter of months.

From an outsider’s perspective, it is easy to see both sides of the argument but we were swayed more to one side.

Most doctors and dentists are currently making a decision on whether or not to remain in the old NHS Pension Scheme or join the new one. One of the primary factors is a change in the normal retirement age from 60 to 65.

If the proposed changes do come through, you will have a new retirement age forced upon you anyway*.

Dr Dearden also made some compelling arguments around the increase in contributions, saying it felt like an unnecessary increase when the scheme was in surplus and more like a form of taxation.

Tax Changes

Bob Senior, the current Chair of AISMA (the Association of Independent Specialist Medical Accountants), warned about the recent tax changes and how GPs are likely to see an increase in their tax bill. He then explained a couple of methods that could be utilised to help medics mitigate their tax bill.

Cornerstones of Financial Planning

Next up was Max Spurgeon, a Director of Legal & Medical Investments, who went through the four cornerstones of financial planning for GP’s and their practices.

He reviewed the importance of the practice agreement and how this could be utilised in conjunction with locum contracts to help protect the practice profits. The recent surge in providers in the locum market has seen price being driven down and a new variety of contracts coming to the surface.

The importance of income protection was also highlighted and how it could be used to maintain financial freedom. Max finished his presentation looking at ways to ensure that a GP’s family and practice are best protected in the event of untimely death - a sombre but important consideration to address.

Arranging a Loan

The day finished with Ian Crompton, Head of Healthcare Banking at Lloyds TSB, discussing practice buy-in, how to arrange a loan and the various factors that should be considered.

It was great to meet some of the 60 or more delegates that attended and debate such highly topical issues throughout the day.

Latest Developments*

At the beginning of November 2011, the Coalition Government put two last minute offerings on the table to make Lord Hutton's report proposals more palatable.

If you're within 10 years of retirement from April 2012, it is proposed that you would keep your current pension entitlement. This has to be good news as it would retain your normal retirement age of 60 and your accrual rate, be it 1/80th or the current CARE scheme.

The second sweetener is an improvement in the accrual rate to 1/60th. The Government estimates that this is an 8% increase in benefits from the previous offer.

Article by Mike Rawson & Max Spurgeon
Independent Financial Advisers at Legal & Medical Investments
November 2011