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Retirement planning: five key financial questions, answered

Michael Copeland

Michael Copeland, Dental Regional Manager for Wesleyan Financial Services, reveals sought-after financial nuggets when it comes to life after work for dentists…

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Why now is the best time to begin your retirement planning

Paul Barnfather, Specialist Dental Financial Adviser for Wesleyan Financial Services, shares how there is a cost when delaying financial planning for retirement.

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Wesleyan supports 15 dentistry students with £65,000 Scholarship funding

Birmingham-based specialist financial services mutual, Wesleyan has announced it will be supporting 15 dental students from disadvantaged communities with scholarship funding worth over £65,000. Each student will receive scholarship fees of £1,500 per year for the first three years, as well as regular mentoring and practical support both before and at the University of Birmingham.

The need for skilled dentists is more urgent than ever due to the pandemic. Dental surgeries were closed for months in lockdowns and many people are still avoiding routine check-ups for fear of COVID-19. This means people often need more complex treatments for advanced tooth decay and gum disease when they do see a dentist.

Nathan Wallis, Chief of Staff at Wesleyan said: “We’ve always been committed to supporting dentists through every step of their careers, from their first appointment right through to retirement, and we are proud to support 15 students, at the start of their professions. Not only do we care about our communities and the challenges of social mobility, but we also understand that access to funding is critical to getting started at university.”

Professor David Adams, Pro-Vice-Chancellor and Head of College of Medical and Dental Sciences, from University of Birmingham said: “Undergraduate dentistry students study for five years, instead of the usual three for many other subjects; by choosing to go into a field where they can help others, they are making a huge financial commitment. The scholarships from the Wesleyan Foundation will help to ease the pressure on students who would have otherwise struggled to get started at university.”

The scholarships form part of the University of Birmingham’s Pathways to Birmingham (P2B) programme, which has helped over 5,500 young people from underrepresented backgrounds study at the University over the last 20 years. The P2B programmes are targeted at young people who are the first in their family to go to university, are from low-income households, live in a postcode where few people go to university, have a disability, have been in care and/or are estranged from both parents or guardians.

Wesleyan, the specialist financial services mutual, launched the Wesleyan Foundation in 2017 as part of their commitment to supporting great causes that are important to their customer base of doctors, teachers and dentists, and the communities in which they live and work.

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Lifetime Allowance reduction could leave some dentists with a significant tax charge

The Lifetime Allowance is the total amount of pension savings you can build up tax efficiently over your lifetime. On 6 April 2014 the Lifetime Allowance will be reduced from £1.5 million to £1.25 million. Many dentists could well exceed this due to the generous nature of the NHS Pension Scheme, especially those later in their career. A pension pot of £1.25 million translates roughly into an annual NHS pension income of between £54,300 and £65,500 depending on which section of the NHS pension scheme you are in.

Remember that the value of your pension savings for the Lifetime Allowance includes any private pensions or occupational pensions you may have, as well as your NHS pension.
You're encouraged to review your existing pension arrangements before the changes come into force in April 2014.

What will the impact of the changes be?

If your benefits at retirement exceed the Lifetime Allowance, you will incur a Lifetime Allowance tax charge on the excess amount. This will be 55% if the excess is taken as a lump sum and 25% if taken as an income.

How likely am I to exceed the Lifetime Allowance?

If you fall into one of the following groups, you may have already reached, or be close to reaching, a pension pot in excess of £1.25 million:
  • you have accrued significant NHS pension benefits already during your career, this will be driven by both your years service as well as your revalued lifetime earnings
  • you have made significant contributions over your working life to a private pension or have bought additional benefit through your NHS pension, for example through Added Years


Is there anything I can do to protect myself from the changes?

In his 2012 Autumn Statement the Chancellor, George Osborne, proposed two new types of protection – fixed protection 2014 and individual protection 2014 – both designed to ease the transition to the new lower limit and help protect existing pension savings. 

Fixed protection 2014

  • This will allow people to fix their Lifetime Allowance at £1.5 million
  • The protection may be lost if individuals build up additional pension savings after 5 April 2014
  • Fixed protection may also be lost if an individual starts contributing to a new pension arrangement
  • Individuals need to apply for this protection before 6 April 2014. It is expected that the application form will be available later this year 
  • You will not be eligible to apply for this protection if you have Primary, Enhanced Protection or Fixed Protection 2012.

Individual protection 2014

This is under consultation until 2 September 2013, after which final details will be confirmed, but it is expected that:
  • It will give individuals a personalised Lifetime Allowance based on the value of their pension savings on 5 April 2014 up to a maximum of £1.5 million
  • Individuals will need to have pension savings of at least £1.25 million on 5 April 2014 to apply
  • Protection will not be lost if further savings to pensions are made
  • You will have three years to apply for individual protection 2014 from 6 April 2014
  • You will not be eligible to apply for this protection if you have Primary or Enhanced Protection


Should I opt out of the NHS Pension Scheme in order to register for fixed protection?

For the vast majority of active members this would be unwise, as the benefits lost by voluntarily opting out of the NHS Pension Scheme before retirement would be far greater than any advantage gained by having a higher lifetime allowance. However, for a small number of members, such as those already very close to retirement, there may be some merit in exploring this option further.
Decisions about leaving your pension scheme prematurely should be taken extremely carefully. Whist minimising your tax liabilities is definitely one consideration, it shouldn’t be the only one.
This is a complex area and one which isn’t easily navigated. Only by understanding all of your options and your current pension position will you be able to make an informed decision. It’s important to remember that there is no ‘one size fits all’ approach when it comes to fixed protection and that no ‘rule of thumb applies’. You should seek guidance from a financial adviser who has a good understanding of the NHS Pension Scheme.

Contact your local Financial Consultant

If you would like to find out more about how these changes may impact you, request a no-obligation appointment with one of our Financial Consultants:
Call 0800 092 1990, email: This email address is being protected from spambots. You need JavaScript enabled to view it., or book an appointment online.
Visit our website to find our more about Wesleyan's range of  financial services for dental professionals and practices.
Wesleyan Medical Sickness is a trading name of Wesleyan Financial Services Ltd (Registered in England and Wales No. 1651212) which is authorised and regulated by the Financial Conduct Authority. Wesleyan Financial Services Ltd is wholly owned by Wesleyan Assurance Society which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Head Office: Colmore Circus, Birmingham, B4 6AR.
Telephone calls may be recorded for monitoring and training purpose. DE-SP-59 07/13


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