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Round one to the BMA

Experts answer your questions on more pension situations

Q After a year as a salaried GP I have decided to try full time locum work. How can I ensure this work remains superannuated under the NHS pensions scheme?

A Your will need to pay 6 per cent of all your NHS locum work into the NHS pension scheme. Another 14 per cent must be paid as an employer contribution. This should be paid by a ‘Host' PCT.

You need to contact the pensions' officer of the PCT for whom you do the most work and register as an NHS locum. You will need to provide details of your NHS pension scheme reference number and national insurance number.

Do all of this in writing and once you have written agreement you can begin paying your 6 per cent contributions to them.

They should then add the 14 per cent employers' contribution and pay the whole amount on your behalf to the NHS pensions agency.

Keep a monthly record of all your work and get all of this signed off by each practice that you work for. Itemise each session with time worked and fee earned. Multiply each monthly total by 6 per cent , sending the resulting figure and accompanying documentation monthly to the pension officer at the PCT or PCA. You must keep copies of everything that you send and ask for written confirmation of each payment. File these carefully.

You can claim tax relief on your 6 per cent contributions so ensure you pass the details to your accountant with your annual income and expenses. You should also receive an annual statement from the PCT of payments made on your behalf. This usually arrives several months into each financial year. File this carefully also. Personally I would check with the NHS pensions agency 6 months after you start and then annually, to ensure your payments are being made.

Even work that you do for neighbouring PCTs is still channelled through your host PCT. Some PCTs have been reluctant to host locums for financial reasons. If you have problems you must contact your local LMC and also consider involving the BMA if necessary.

Q I currently work full time. I will soon be 59 and am considering taking my NHS pension at that age followed by a part time return to work, with a flexible full retirement date. I have been told that it would be better from a financial point of view to do this at 60. What are the reasons?

A Your information is correct. There are three main reasons.

First, under the current scheme you would face an actuarial reduction in your pension by retiring one year before age 60. The current reduction factors at 59 are 0.943 for the pension and 0.971 for the lump sum. For example if your pension value is £40,000 p.a. and lump sum £120,000, the reduction would be to £37720 and £116520 respectively.

Second, if you worked to age 60 you would have one more year of superannuable earnings to add to you pension value.

If your superannuable profit from age 59 to 60 were £90,000 this would increase your pension by £1260 p.a. and lump sum by £3780.

Third, you run the risk of your pension being abated by your part time earnings if you take your pension at 59. This means that if your part time earnings plus your pension exceed your previous full time earnings the pension will be abated pound for pound. For example if you are currently earning £90,000 and next year your part time earnings are £60,000 you would face abatement as once this is added to your pension (£37,720) you will earn £97,720 i.e. £7,720 more than previously. Your pension would therefore be abated by this amount.

If possible it is sensible to work part time only to a maximum income of £52,280. Abatement does not apply from 60 years onwards. Remember that to be able to draw your pension and return to work you must have at least a one month break.

Note that one of the new NHS pension proposals is to make retirement more flexible by ending abatement. If made official, this is unlikely to take effect for several years.

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