By: 8 December 2016
Money Matters: Don’t make the mistake of failing to protect your pension

Simon Bruce of Cavendish Medical explains your options.

One of the biggest issues we see when helping new clients is poorly managed pensions savings which, in some cases, can trigger tax charges of up to 55 per cent. Unfortunately, we find that some surgeons have been previously advised by people who may not fully understand the intricacies of saving into the NHS scheme.

There is a lifetime allowance that limits the total amount that can be saved into your pension free of tax and it was reduced to £1 million on 6 April 2016.

Although £1 million may sound like a large sum, as an example, a doctor in the 1995 NHS scheme with a predicted pension of just over £43k per year will hit the limit.

The government has reduced the lifetime allowance several times in recent years but it has always introduced a range of transitional protections to help the individuals affected. The latest version – Individual Protection 2016 – can restore the value of a saver’s pension allowance up to a maximum of £1.25 million, provided they held pension savings in excess of £1 million as at 5 April this year.

Alternatively, if your pension was valued in excess of £1.25 million as at 5 April 2014, you may still be eligible to apply for the original protection scheme Individual Protection 2014. This could restore your allowance up to a maximum of £1.5 million as long as you apply by 5 April 2017.

Remember that the lifetime allowance applies to the sum of your NHS pension as well as any private pensions you hold. The calculations to ascertain the combined value of your pensions are complex – HMRC uses different methods to value private and NHS schemes.

Online applications for the protection schemes have just been launched and are available at but you will need an account for HMRC online services to use the system.

This is a challenging issue to tackle alone and mistakes could prove costly.

Simon Bruce is managing director of Cavendish Medical – specialist financial planners for senior medical professionals in the NHS or private practice. For a second opinion on your finances, please contact us on 020 7636 7006.

The content of this article is for information only and must not be considered as financial advice. Cavendish Medical always recommends that you seek independent financial advice before making any financial decisions.

Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor. The value of investments and the income from them can fluctuate and investors may get back less than the amount invested.