Thousands of doctors are at risk of missing out on enhancing their pension.
The next 12 months is the last time it will be possible to buy ‘added years’ and, for a full pension at the age of 60, you need 40 years’ contributions.
Therefore, unless you qualified and started work as a doctor at the age of 20, you will have a shortfall in your contributions.
When the new scheme comes in, ‘added years’ will go forever, because the government perceives that they cost too much money.
As doctors are the beneficiaries, guess who will lose out when the scheme changes and the option disappears?
The new NHS Pension scheme will start some time between December 2007 and April 2008, the pundits believe.
You will only have one chance as you must start the contract at your next birthday.
While added years might appear expensive, they are better than anything else available — no one outside the current NHS scheme can match the value.
I am not a pensions expert, but doctors who are not buying added years and are buying AVCs instead have probably been ill advised.
They should seek advice as to whether they should stop contributing to their AVCs, and instead buy added years and approach the broker for compensation.
No one seems to be telling doctors about this. On the other hand, why should they? The DoH doesn’t want us to know, and private pension providers and independent financial advisers get no commission from ‘selling’ added years.
If you retire at 60, having bought added years, you only need to live to about 67 to start benefiting. From then on the enhanced pension that you will have achieved will last for the rest of your life and for your spouse’s life if you die first, and it is index linked.
It is possible that doctors whose next birthday is in January will be too late, unless they give notice of wishing to buy added years in the next week or two.
Dr Peter G Williams
Chairman, East Sussex LMC