GPs Lifetime Allowance Pension Protection: A guide to the 6th April changes

Healthcare, Pensions

Stethoscope

There have been many changes to pension legislation over the last decade, the latest of which will take effect from 6 April 2016.

If you have not spoken to a pension advisor regarding these changes then we would strongly recommend that you take a few minutes to look at the below which could prove to be incredibly valuable for you.

The following HMRC web link provides a useful guide to the reduction in lifetime allowance taking place as of 6 April 2016 and details of the various types of protection available for those people who are close to or above this new limit: https://www.gov.uk/guidance/pension-schemes-protect-your-lifetime-allowance

If you do not currently have any protection in place, then if you do find yourself in a position where you can apply for one of the various forms of protection, it is essential that you check the deadline for when the said protection is due to close, as some forms of protection will not be available after 5 April 2017.

If you wish to apply for protection then this is something you are able to do yourself via the Government gateway portal. However it is essential that you fully understand what you are applying for, as if you breach the qualifying rules then you will not be able to re-apply.

It should be pointed out that you can use an estimated pension value if necessary as a part of the application process. However it is advisable to underestimate said values as some forms of protection require a minimum total fund value.

To help you assess what impact, if any, the recent pension changes are likely to have on your lifetime allowance, you can use the following link to the NHS Total Rewards website: https://www.totalrewardstatements.nhs.uk/

It is worth bearing in mind that you do need to register in order to access the NHS total rewards website.

Determining the value of your NHS pension for lifetime allowance purposes

The following formula will allow you to determine the value of your NHS pension for lifetime allowance purposes:

NHS Pension annual income x 20
+ Lump sum
+ Any private (non-NHS) pension funds that you may have
= Deemed value of pension funds to measure against the lifetime allowance.

So, for example, if you annual NHS pension is estimated as being £60,000 per annum, with a £180,000 lump sum, then your deemed NHS pension valuation would be £60,000 x 20 = 1,200,000 plus £180,000 = £1,380,000, in which case you might want to consider taking out Individual Protection 2014 with HMRC.

This figure then needs to be added to any other pension arrangements you might have.

If you have any questions relating to this email then please contact Richard Martin 01223 50 7634, richard.martin@pricebailey.co.uk, or Phil Sutton 020 7065 2664, philip.sutton@pbfp.co.uk, for further details.

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