Changes to NHS Pension / Employers Contribution

GPDee

Looking for thoughts on changes to the Employers contributions for NHS pensions.

As a self employed GP partner I have for years paid both the employers and employees contribution to my pension which has amounted to 13.5% and 14% - so 27.5% of gross salary was going to pension. With the changes coming in April the employers contribution will change to 20% and the employee contribution stays the same. So from April I will pay 33.5% of my gross salary into my pension. Whilst I believe in sensible planning for the future, this seems an excessive amount to go into a pension. I have always thought the NHS pension scheme to be a good one, but now I am not so sure. Any advice appreciated.

Marcon

The NHS pension scheme is a first class one. Don't forget that in your position, you get tax relief on both the employer and the employee contribution (one is a trading expense, the other a personal contribution), so assuming you are a 40% taxpayer, your contribution isn't the headline figure you are citing.

Flugelhorn

story was that the practice funding was going increase to cover the extra cost - mind you that was a couple of months ago and I have retired since! Is there any more news on the funding?

GingerJim

The NHS pension has to be the best risk-free pension around.

The issues for ypu are likely to be:

1. Your income may well trigger tapering limits to your tax free amount.
2. The growth on your penaion benefits are likely to exceed at various times the annual growth allowance.
3. You may well exceed the life time allowance.

Like many higher earners in the NHS you will want to keep an eye on all of this, and work out what strategy you need to adopt to minimise the tax bills now and in the future. There is no easy answer as yet.