Busting the top pension myths for dentists

By Paul Griffiths, dental Specialist Financial Adviser…

September marks the annual Pension Awareness Week (this year running from Monday 15th September), making it the perfect time to explore one of the most important, but often misunderstood, parts of a dentist’s financial plan: pensions.

You may have an NHS pension, private pension, and perhaps the future practice sale among other assets to consider, but that doesn’t mean the gaps in your retirement planning automatically fill themselves. In fact, some of the most common assumptions about pensions could leave you financially exposed.

Here are five of the most common myths we hear and why it’s worth looking beyond them:

Myth 1: “My NHS Pension will cover everything I need”

The NHS Pension Scheme is seen as a gold standard benefit, and quite rightly so. It provides a guaranteed, inflation-linked income for life, something that few private pensions can match.

However, for high-earning dentists, it might not cover everything. The more you reduce your NHS commitment in favour of private dentistry, the smaller your NHS pension accrual becomes, potentially leaving significant gaps in your retirement plans. And while the abolition of the Lifetime Allowance has simplified matters, annual tax limits remain. Many dentists are caught by the tapered Annual Allowance, which restricts how much can be saved tax-efficiently each year.

The NHS pension is a strong foundation, but it may not be the full retirement picture.

Myth 2: “Relying on a practice sale is better than a pension”

Practice ownership can feel like the ultimate safety net in terms of future wealth. After years of building your business, the sale may be your biggest financial asset. But there’s a danger in thinking of it as your pension.

Valuations rise and fall with demand, local competition and wider economic conditions. If the market dips just as you plan to retire, you could be forced to accept a lower price than you expected or delaying your retirement altogether.

Even with a strong sale, taxes still apply, and the proceeds are a one-off sum that needs careful management to last throughout retirement.

Myth 3: “I don’t need private pensions if I’ve got the NHS scheme”

It’s tempting to assume that your NHS pension alone will take care of you. But private pensions can give you something the NHS scheme doesn’t always provide, which is flexibility.

If you’d like to retire before your NHS pension becomes payable or you’re considering reducing NHS commitments, private arrangements can help bridge the gap that forms in these circumstances. They also allow you to tailor your income in retirement, making it easier to manage your tax position. Most importantly, diversifying your income sources reduces the risk of being over-reliant on one stream.

Myth 4: “Pensions aren’t important to look at until closer to retirement”

Dentists are busy people and pension planning often gets pushed to the back of the queue. The problem with waiting is that time is one of the most powerful tools you have.

The sooner you understand what options are available to you, and the benefits of planning sooner rather than later, the more chance you have achieving your retirement income goals. In simple terms, the sooner you start to make any required additional retirement funding, the less it should cost you in the long run.

Allowances such as the Annual Allowance and ISA Allowance also have a use-it-or-lose-it factor, meaning you can’t always make up for lost opportunities and contributions later.

Thinking ahead also helps when aligning your pension planning with a practice sale, as you’ll be better placed to take advantage of allowances and reliefs if you’ve structured things well in advance.

Please note: The value of a private pension can go up and down and its value, when you take benefits, might be less than you paid in.

Myth 5: “Pension guidance is only for people nearing retirement”

Finally, many dentists assume guidance is only useful once they’re in their fifties or sixties. In reality, the complexity of pensions for dentists with multiple income streams and assets can make early, specialist guidance even more valuable.

From navigating tapered tax allowances to modelling different retirement scenarios based on your level of NHS provision, a financial adviser who understands dentistry can help you make informed decisions now, not just later. The earlier you start, the more options you have and the less it might cost you to reach your retirement goals.

Seek specialist guidance

Pensions for dentists are rarely straightforward. With NHS benefits, private earnings and the prospect of a practice sale all in play, it’s easy to fall into myths that leave you underprepared. The key is balance. By recognising the limits of each income source and planning ahead, you can build a strategy that gives you both security and flexibility in retirement, helping you achieve a future that reflects the years of work you’ve invested in your career.

If you’d like to explore your pension situation, speak to a Wesleyan Financial Services Specialist Financial Adviser. Visit wesleyan.co.uk/pension-aware or call 0808 149 9416.

Charges may apply, but you will not be charged until you agree on the services and costs. Learn more at www.wesleyan.co.uk/charges.

About Paul

Paul Griffiths is a dental Specialist Financial Adviser at Wesleyan Financial Services, supporting dentists, their families and their practices with financial planning to secure their financial future.

Wesleyan Financial Services Ltd (Registered in England and Wales No. 1651212) is authorised and regulated by the Financial Conduct Authority. Registered Office: Colmore Circus, Birmingham B4 6AR. Telephone: 0345 351 2352. Calls may be recorded to help us provide, monitor and improve our services to you.