30th April 2019
Prudential: Are Doctors in the NHS pension scheme misdiagnosing their pension?
The press is having a minor epidemic of commentary about doctors retiring early to avoid Lifetime Allowance (LTA) and/or Annual Allowance (AA) charges but, the thing that concerns me about this is, are they diagnosing the problem correctly? Graeme Robb, Senior Technical Manager at Prudential answers the question.
Yes, nobody likes paying more tax and it’s a bitter pill to swallow, but if the net result is you are richer is this not a good thing? It may seem nonsensical, but it probably seemed nonsensical the first time that the rat poison warfarin was used to make humans healthier??
The value of the scheme should not be underestimated, looking at those starting out in their careers let’s compare what they would get in the career average scheme compared to a money purchase scheme. Looking at the BMA website junior doctors in England in Foundation Doctor year one will have a starting salary of £27,146, based on that salary their contribution to the scheme is 9.3% (£2,524.58 gross). For a basic rate taxpayer that costs them £2,019.66 a year / £168.31 a month.
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