The deadline is 31st July 2014 to submit a Scheme Pays Election form for the tax year 2012-13. Scheme Pays is where you have elected to let the NHS Pension Scheme to pay any Annual Allowance Charge you may have incurred in 2012-13. Remember for any doctors, particularly GPs, who do not have concrete figures yet, still need to estimate their liabililty and use the best estimate of numbers at this time.
As a reminder here is a brief Annual Allowance guide for doctors. This is only a brief summary - it is much better to get together and look at your own individual situation to see if we can help:
Firstly if any of the following applies to you - then get in touch. You may need advice surrounding the Annual Allowance:
- Do you earn over £100,000?
- Has your NHS Pension Scheme Membership increased significantly perhaps if you have MHO status?
- Are you making significant pension contributions? For instance Added Years, AVCs, Personal Pension Contributions?
- Have you had a signficant pay rise? Or received a Clinical Excellence Award?
- Or just if you are a doctor in Bristol and are unsure?
What is the Annual Allowance?
The Annual Allowance is the maximum growth in your pension rights in any one tax year. The reason for the potential issue for doctors is that Annual Allowance has recently decreased significantly from £255,000 to £50,000 and now this tax year to £40,000.
In terms of your NHS Pension Scheme the growth in your NHS Pension rights are measured by calculating the growth in your benefits from one tax year to the next - whilst taking into account inflation.
NHS Pension Scheme Savings Statements
NHS Pensions will send you a 'Savings Statement' if you have exceeded the Annual Allowance in one year. Remember NHS Pensions will not know any other pension contributions you have made - it all needs to be taken into account. Get advice.
The NHS Pension Scheme Savings Statements will be sent out by:
For Tax Year 2012-13 - 6th October 2013
For Tax Year 2013-14 - 6th October 2014
If you have any doubts about your personal situation with regard to the Annual Allowance (and have not received a Savings Statement) you can still request one from NHS Pensions in order to work out your overall position.
Exceeding the Annual Allowance
It is doctors' responsibility to calculate any Annual Allowance charge. The charge depends up on the individual doctor's marginal rate of tax. Remember if you are above the Annual Allowance in any one tax year - you can look back three years to see if there is any Annual Allowance available to offset the current years.
Paying the Annual Allowance
Basically there are 2 options for doctors. You can pay the charge directly to HMRC. Or use Scheme Pays which is a process by which the NHS Pension Scheme can pay for the charge on your behalf.
Scheme Pays is only available if your Annual Allowance charge is above £2,000. Scheme Pays broadly means your NHS Pension Scheme benefits will be reduced when you come to retirement and there is also an interest charge applicable (Inflation + 3%).