NHS Doctor Pensions - For the few, not the many

Jokester said:
Yes. I can only assume the reason why people are getting tax bills at the end of the year is because they are going over this limit and HMRC are claiming back the overpaid tax relief on their pension payments.
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Indeed, bills they were not expect due to have 2 pots in different schemes, one they don't pay into anymore, but still increases in theoretical value, and one they pay into for the new NHS scheme.
You can go over a 40K limit for pot accrual given a dodgy years CPI/RPI value, or worse in my case a pension correction, where they had undervalued the pot for several years despite taking contributions, revalued in one year when they switched the scheme, and hit us with the limits due to their mistake.
 
Remember there are 2 different schemes and this really affects defined benefit far more than defined contribution.
Under DB (career average, final salary etc) the value goes up and down based on future expected payouts, the market risk is bourne by the scheme not the individual.
The big movements we had came from life expectancy, if you suddenly say people will live 5 more years the value of the scheme goes up.

the annual allowance will normally only affect those on decent salaries towards the end of their careers, like senior doctors. If you have paid a half decent amount into a scheme for say 20-30 years it will be worth a hell of a lot more than you paid in.

Are the NHS not allowed to have the extra over the AA taken from the scheme? This has two advantages, it reduces the benefits slightly (so potentially helping the same issue in future years) and avoiding the tax bill coming from current salary.
I was fairly sure this was semi common practice.
 
Mercenary Keyboard Warrior said:
Remember there are 2 different schemes and this really affects defined benefit far more than defined contribution.
Under DB (career average, final salary etc) the value goes up and down based on future expected payouts, the market risk is bourne by the scheme not the individual.
The big movements we had came from life expectancy, if you suddenly say people will live 5 more years the value of the scheme goes up.

the annual allowance will normally only affect those on decent salaries towards the end of their careers, like senior doctors. If you have paid a half decent amount into a scheme for say 20-30 years it will be worth a hell of a lot more than you paid in.

Are the NHS not allowed to have the extra over the AA taken from the scheme? This has two advantages, it reduces the benefits slightly (so potentially helping the same issue in future years) and avoiding the tax bill coming from current salary.
I was fairly sure this was semi common practice.
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You can scheme pay AA bills but the compound interest is eye watering. It doesn't fix the issue that it's far better just to drop work and not go over the AA cap.

I'll start hitting AA bills in my late 30s. So it's not that late in my career.
 
ultralaser said:
I know a fair few NHS consultants and compared to industry £100k+ staff they absolutely work less hours.
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Wow that's some high level evidence right there. "Industry staff" doesn't really tell you anything about risk level, training, pressure, demand for skills elsewhere.

It is an issue however with the consultant contract is there are huge differences between workload between specialities that aren't well recognised financially.
 
Minstadave said:
You can scheme pay AA bills but the compound interest is eye watering. It doesn't fix the issue that it's far better just to drop work and not go over the AA cap.

I'll start hitting AA bills in my late 30s. So it's not that late in my career.
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Oh I am sure, I mean once your future pension is secure then why not, at the end of the day you can only spend so much, and working so enjoy life :)

I was just surprised it sounded like people were not doing the fund paying thing if they unexpectedly got a high bill.
 
Minstadave said:
Wow that's some high level evidence right there. "Industry staff" doesn't really tell you anything about risk level, training, pressure, demand for skills elsewhere.
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This is what really loses any support for consultants, they think they're so special, there's loads of industries where you need consistent high level training with massive pressure. Back at the OP we're talking about tax incentives for folks who over a career will make > £3.6 million (and that's a LOW estimate) to work on average 40 hours a week - you're having a laugh.
 
The stupidity of unfair tax policies is universal, not just when a favoured vested interest complains about it.

While we continue to persue unfair and inconsistent taxation policies, the unfairness will continue.
 
Mercenary Keyboard Warrior said:
Oh I am sure, I mean once your future pension is secure then why not, at the end of the day you can only spend so much, and working so enjoy life :)

I was just surprised it sounded like people were not doing the fund paying thing if they unexpectedly got a high bill.
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I haven't looked into scheme pays but the feedback is that they are extremely expensive but if you're near LTA they're not terrible.
 
ultralaser said:
This is what really loses any support for consultants, they think they're so special, there's loads of industries where you need consistent high level training with massive pressure.
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Problem is currently consultants are special, there's not enough of them and the current pension system doesn't let the ones that want to work actually work. As a champion of industry I'm sure you understand supply and demand.

Medicine is a mess currently, a single unintentional mistake and you can lose your career, livelihood and even your freedom. The Bawa-Garba case shows that perfectly.
 
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FishFluff said:
You'll also be wanting to increase NHS workers pay to compensate then, yeah?
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That would depend on whether the role is already over or under paid compared to the private sector. If roles are overpaid then no, its called efficiency improvement. Some roles will be underpaid im sure, probably nurses and the non manegerial roles.
 
danlightbulb said:
That would depend on whether the role is already over or under paid compared to the private sector. If roles are overpaid then no, its called efficiency improvement. Some roles will be underpaid im sure, probably nurses and the non manegerial roles.
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It's a slightly odd comparison though isn't it? You cant ask a senior HR manager to come and fill in for a trauma and orthopaedic consultant.

You need to pay enough to recruit and retain the staff required to meet the UKs health needs. Ypu also need to train enough doctors to provide future security.

Demand is outstripping supply currently, you can try and "efficiency improve" your way out of a staff shortage but I cant imagine it'll be successful.

If the Government had any sense it would invest heavily now to have a glut of skilled staff in future, unfortunately theres little thought to beyond the next general election so this never happens. Instead we get half baked recruitment drives from overseas.
 
danlightbulb said:
That would depend on whether the role is already over or under paid compared to the private sector. If roles are overpaid then no, its called efficiency improvement. Some roles will be underpaid im sure, probably nurses and the non manegerial roles.
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Not sure how that's relevant. You're talking about reducing the overall compensation package (salary/pension/leave/etc) for everyone in the NHS. When you look at total compensation packages, the public and private sectors are generally pretty closely matched. Take my job as a data scientist for example. I could quite easily earn an extra 15-20% if I upped sticks and went to work for a bank, but I'd probably break about even when you factor in that my pension would be less and I'd not get as much annual leave.

You're coming across as someone who has read an article about the NHS having too many 'managers' and 'gold plated' pensions without actually looking into it.
 
FishFluff said:
You're coming across as someone who has read an article about the NHS having too many 'managers' and 'gold plated' pensions without actually looking into it.
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What I see is that I work in water utilities which get regulated efficiency improvements pushed on them that inevitably hits salaries and staffing, that my employer contribution is max 6% in a defined contribution scheme and that figures of 13.5% employer contribution are being touted here, which my tax is paying for.

So yes I do feel that is excessive.

I am all for salaries being appropriate for the role responsibility, level of training and demand. And i totally agree that recruiting from oversees is an awful solution to the problem. But excessive pensions really get my goat because its in old age that this separates those who are forced to live in poverty and those with their 10 holidays a year.

If a high earner wants to top up their pension pot to above normal levels then great, but it should absolutely be taxed over a certain threshold that is unachievable to most people.
 
Destination said:
the issue with an NHS pension is the 1M pot won't generated anything like 50k a year as it isn't a pop, its a theoretical pot created by the govt.
Tax is paid on the actual pension, so it isn't free money at both ends.
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What do you mean by this bit? If you've maxed your pot out upon retirement, then surely you'll have a retirement package based on some sort of annuity or drawdown. Surely the NHS must be putting the pension contributions into some pot somewhere and aren't relying on the NHS budget to fund that years pension payouts? What would happen if the government cut the budget, do peoples pension payouts then drop?

Destination said:
The allowance is pot growth based.
It isn't contribution based, if it was contribution based there wouldn't be this issue.
I doubt many doc is making 40K a year of contributions.
If my pot is large and I am 10 years away from retirement, then pot growth, of which there are now two due to the govt rejigging the pension is a major factor.
The 'overly' generous NHS topup you speak of, at the high end they are making contributions of 14.5% for a career average pension now under the 2015 scheme.
It isn't the generous last 3 years scheme that used to exist.
Those boys are getting their money, having never had to deal with the annual allowance, and used to make contributions of 6%.
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14.5% contributions is still very generous compared to other industries - most seem to cap out around 5-8%.

If your pot is large and likely to hit the allowance, why not opt out of pension contributions and do as minstadave mentioned with the regular opt-in/opt-out. The money saved from opting out can be put towards private savings.
 
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