Retirement Planning for Dentists

Pensions are long-term investments with special tax rules

Pensions are inherently long-term investments with special rules surrounding them

  • The age at which you can take your pension
  • Tax relief on contributions
  • Annual allowance and Lifetime Allowance
  • Employee and/or Employer contributions

A pension is a method of funding for a retirement income and the fund can be accessed from age 55.  It’s very important that retirement planning is integrated into your financial planning as soon as possible.  The earlier you begin saving for retirement the cheaper it becomes.

The NHS superannuation is a form of defined benefit pension where the amount you retire on is largely based on your earnings.  We have an intricate and detailed working knowledge of the NHS pension whether you are still contributing to the scheme or have since left and become a deferred member.  Some of the valuable information we can provide includes:

  • Projecting and estimating your benefits in retirement
  • Closely analysing and monitoring where you are with respect to both the Lifetime Allowance and Annual Allowance
  • Looking at the impact Added years’ contracts will have on your NHS pension
  • Comparisons between the NHS pension and other types of pension
  • Cost effectiveness of the contributions you make
  • Advice on buying additional NHS pension benefits

A personal pension is a type of defined contribution or money purchase pension.  By making contributions your pension fund will grow over time and provide you with an income in retirement. Pensions can be a very tax efficient way of saving for retirement.  Most people can claim tax relief on pension contributions and for higher and additional rate tax payers the relief can be significantly more.

We can help you to select the right pension provider and decide from the range of investment funds available the most suitable for your needs and appetite to risk.  In addition, we will recommend contributions which are affordable and most appropriate to you.

Stakeholder pensions are another form of defined contribution personal pensions.  They are required to have certain features, such as:

  • limited charges;
  • low and flexible minimum contributions;
  • penalty-free transfers;
  • a default investment fund – a fund your money will be invested in if you don’t wish to select your own.

The self-invested personal pension (SIPP) is a pension wrapper that can hold a greater range of investments when compared to a stakeholder or personal pension.  It has the same tax advantages as other pensions as well as the ability to borrow further funds against the assets held in the SIPP.   SIPPs typically suit clients who want more flexibility in the investments they choose to invest in.

SIPPs may have higher charges than other personal pensions or stakeholder pensions due to the increased flexibility. For these reasons, they may be more suitable for large funds and for people who are experienced with investing.

A number of our clients operate SIPPs that own their dental practice.  This can be advantageous in a number of ways including for tax planning and future income streams in retirement. A typical range of investments in a SIPP could include the following:

  • UK and Overseas stocks and shares
  • Unlisted shares
  • Unit trusts
  • Investment trusts
  • Open ended investment companies
  • Insurance company funds
  • Deposit accounts
  • Gilts and securities
  • Commercial property

When you reach retirement age and you look to take an income we can help you plan when and how you choose to take that income.  The new pension flexibilities introduced in April 2015 have made retirement planning more flexible, some would say more complex, than before and you need to be aware of all your options.

Analysing your investments, pensions, possible rental income and any other forms of income we produce an in depth but easy to understand report.  We will look at the most tax efficient way to optimise your various sources of income and allow for any provision of a lump sum which may be needed now or in the future.  We will also consider legacy planning for your spouse/partner and dependants.

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