Your NHS pension can be affected by decreasing levels of NHS work, something often triggered by diversifying into private general practice.
The increasing disillusion with NHS contracts amongst dental practitioners is well documented and understood by us here at the BDA.
The benefits of the NHS pension
"the NHS pension scheme is a high-quality retirement savings vehicle...a state-backed promise of an income in old age."
At the outset, I always like to remind dentists that the NHS pension scheme is a high-quality retirement savings vehicle. It offers members a state-backed promise of an income in old age. That income is based on the NHS pensionable earnings you receive over your career. The retirement income grows in line with inflation each year, and the scheme provides income for your dependents in the event of your death.
The NHS pension scheme has changed over the years, and in recent decades those changes have tended to make the scheme less generous, or more costly, for members. However even with those changes, the scheme is very valuable, attracting an "employer" contribution in excess of 20% of your pensionable earnings. At present, that contribution will not be paid in any other form, or to any other pension arrangement.
The true value of the scheme will vary hugely for each member depending on their own circumstances, but on average it is thought to compare very favourably with private pension savings and offers a degree of security that is largely absent in the private market.
Limitations placed on the NHS pension
"One of our tasks is trying to ensure that members have better control...so that they can manage against breaches of these tax limits."
The scheme is not perfect, and it is our job to negotiate for changes to make the scheme as attractive as possible to dentists within the wider remuneration package. In fact, some higher earning and longer serving members with larger NHS pensions are finding themselves in breach of the upper pension limits imposed by HMRC and facing tax charges. One of our tasks at present is trying to ensure that members can have better control over their NHS pension so that they can manage against breaches of these tax limits.
It is the job of Government to walk the tightrope of ensuring that the pension scheme is suitable to meet their level of commitment to attract and retain dentists in NHS work; whilst ensuring it remains fair to taxpayers.
Reducing NHS work
A dentist with an NHS performer number who undertakes any level of NHS activity (with no lower limit) over the course of a year will retain access to the scheme as an active member. Active membership can be valuable for several reasons:
- For members with career average pensions – including practitioners in the older 1995 and 2008 NHS schemes and all members in the new 2015 scheme – the rate at which pensions are revalued is more generous for active members. They receive annual uplifts in line with inflation, plus an additional 1.5%
- Anyone who leaves the scheme, and becomes a deferred scheme member, will see their pension uplifted in line with inflation only
- Active members retain more generous terms in the event of having to retire on health grounds, or if they die. These rights become diminished in the event of becoming a deferred member
- Active scheme members can access options to buy extra, guaranteed NHS pension rights.
So a member with even a small amount of NHS activity can retain these terms. However, reducing NHS commitment levels will invariably lead to lower levels of NHS pensionable earnings, which will in turn mean that a lower level of NHS pension benefits will build up in the future.
Working in other sectors
Dentists working entirely in private dentistry have only the option of saving through a private pension, which does not include the levels of guarantees offered by the NHS scheme. Savings are subject to the fluctuating values of investment markets, which may be positive or negative (but hopefully over the longer term are largely positive).
Dentists working in the academic sector who are providing teaching or research in Higher Education settings may have access to NHS pension arrangements if they hold an honorary NHS contract. In the absence of an NHS pension, universities will offer access to a workplace pension. The most common of these is the Universities Superannuation Scheme, which would currently be viewed as being of slightly lower quality than the NHS scheme.
HM Armed Forces
Dentists working in the Armed Forces tend to be engaged on terms that give access to the civil service pension scheme, or the Armed Forces Pension Scheme. These are of similar structure and slightly higher quality than the NHS pension scheme.
Dentists who are directly employed by NHS Trusts or Boards will have access to the NHS scheme. Some dental functions have been outsourced by the NHS and are run by private contractors. These organisations should have been granted access to the NHSPS for dentists who are employed to carry out work on such contracts – however it is important to double-check that such access is given.
Roles in government departments or agencies should attract membership of a public service pension scheme, such as the NHS, or Civil Service pension schemes.
It is always important to check the terms of any new role you take on to see what pension provision is offered. If you would like to discuss any aspect of this, do get in touch with our
Head of Pensions