Moving from NHS to Private Practice | The lost benefits

Are you considering moving away from your NHS contract to private practice?

This article explores how a review of the benefits you are losing is essential when moving from NHS to Private Practice.

When you consider moving away from your NHS contract, the main driver could be to get more control over your practice and reduce the pressures around striving to hit a UDA target.

The aspects that you might not have considered however, are the loss of benefits that working within the NHS provides. The primary one will be your NHS pension, which despite feeling expensive to be a member of, provides other benefits which are part of that package:

• Death in service benefit
• Sick pay
• Maternity and paternity pay

When you are thinking about moving away from NHS dentistry, it’s important to be aware of the automatic benefits you will lose and start looking at building a plan to help replace them.

Staying with this scheme is a good decision, as the NHS pension provides you with a guaranteed income for the rest of your life, which rises with inflation and takes care of your significant other (in the form of a dependents pension) if something happens to you.

Death in Service benefit

In addition to retirement benefits, you are also given ‘death in service.’ If you were to die, the NHS pension would pay a lump sum to your estate based on your NHS earnings and multiplied by a specific factor. In addition, your dependents may be paid an income as a form of extra financial support.

Sick pay

You are also entitled to sick pay, which would pay you an income for 22 weeks after a 4-week waiting period, in any 52-week period. The scheme would pay you (taking into account the 4-week waiting period) for 6 months, or it may pay for 10 weeks for one episode of illness and then 12 weeks for another.

Maternity and paternity pay

NHS maternity pay varies throughout your maternity leave and tends to be on a sliding scale starting with 90-100% of your salary issued to you during the first 8 weeks, then from weeks 9 to 26, your salary may be reduced to 50%¹.

If you take time off to support your partner when having a baby, adopting, or becoming a parent through surrogacy, you could receive 1 – 2 weeks paid Paternity Leave, Paternity Pay and Shared Parental Leave and Pay.

A plan of action

When you start to reduce your UDAs or UOAs, you might not have taken into consideration the benefits of having an NHS pension and the other rewards you are phasing out, or if you leave altogether, losing completely. The danger is that over time you will not have taken any action to replace these perks.

We believe this is very much a case of any action is better than inaction.  Everyone’s circumstances are different but planning for your future is essential.

What can you do to secure your future?

Personal pensions

When you look at replacing your NHS pension, personal pensions offer brilliant tax benefits and can help to reduce your tax bill. You will however have to pay your contributions directly from your bank account which can often feel as though it’s more of a financial burden compared to your NHS pension payments, which were deducted at source.

Affordability is always an issue we need to be aware of, but you also need to think about how and when you want to retire. If you plan to retire at 60 and you live until you are 85, your money needs to last for 25 years, but if you live until 100 (we never really know how long we will live) the savings you have made through your working life will need to last for 40 years – that’s longer than you would have been in practice!

Unlike the NHS pension, personal pensions do not benefit from guarantees. You will need to build a pension pot bearing in mind that the bigger the pot, the more income you will have and the more likely it is to last. One of the benefits a personal pension has over the NHS pension is when you die. At this time the value of your pension can pass to your spouse, civil partner, significant other, children, your favorite charity, or anyone else you choose; so, unlike the NHS pension, your personal pension doesn’t die with you.

Life Assurance

Life Assurance can replace ‘death in service.’ This is a scheme that is specific to your needs and one which will look after the ones who would be left behind in the event of your death. Life Assurance can be arranged to replace ‘death in service’ and you can tailor this to your requirements: either provide a lump sum to help replace the income your family would lose if you weren’t there, or perhaps pay off your mortgage.

Income Protection

Finally, sick pay.

The NHS benefit is somewhat inefficient in what it provides and how it is paid. You can replace this with Income Protection and again, you can tailor this to meet your individual needs. You can insure up to 65% of your income in the event of you being off sick and the benefit will be paid tax free to you for as long as you are off work, or until the plan expires, which usually stops when you reach a planned retirement age.

1. https://thepeloton.co.uk/maternity-pay-dentists/#:~:text=Typically%2C%20NHS%20maternity%20payments%20will,50%25%20of%20your%20average%20income
2. https://faq.nhsbsa.nhs.uk/knowledgebase/article/KA-02192/en-us

Lloyd & Whyte (Financial Services) Ltd are authorised and regulated by the Financial Conduct Authority. Registered in England No. 02092560.  Registered Office: Affinity House, Bindon Road, Taunton, Somerset, TA2 6AA. It is important to take professional advice before making any decision relating to your personal finances. Information within this article is based on our current understanding of taxation and can be subject to change in future. It does not provide individual tailored investment advice and is for guidance only.  We cannot assume legal liability for any errors or omissions it might contain.