Here we consider the impact of the Annual Allowance on doctors entering into the 2015 NHS Pension Scheme next year.
The most important point to make is that should a doctor accrue pension rights, after adjusting for inflation, of over £2,500 in a tax year (April to April) then they will have fully utilised their individual Annual Allowance of £40,000 (based on the x16 multiple factor used to calculate the 'deemed' contribution).
As per previous news items, the new 2015 NHS Pension Scheme will be a Care Average Earnings Scheme (CARE) based on an accrual rate of 1/54th and revaluation rate of CPI +1.5%.
This means that for doctors with a salary of say £108,000 will accrue an increase in pension rights of £2,000, 80% of the Annual Allowance (before factoring in the revaluation of accrued rights from their old Sections of the NHS Pension Scheme).
In terms of the revaluation of accrued rights, for doctors with say an accrued pension of £33,333 in the old NHS Pension Scheme, this equates to an increase in pension rights of £500, 20% of the Annual Allowance.
Therefore only doctors who are earning significant salaries and have significant accrued pension in the old NHS Pension Scheme should be concerned with the Annual Allowance.
Doctors tend to get exposed when they benefit from a large increase in pensionable pay as a result of a promotion or award.
As always, this kind of thing is best reviewed on an individual basis. Get in touch on firstname.lastname@example.org or 0117 966 5699 to arrange a complimentary initial meeting.