The prevalence of errors in NHS pension records is a pressing issue, with reports of nearly 20% of records containing mistakes. These errors can lead to significant financial consequences, from incorrect annual allowance tax charges to discrepancies in accrued pension benefits.
Protect your NHS pension
Here are a few steps that might help in ensuring the accuracy of NHS pension records:
Regularly check pension statements: It’s important to regularly check pension statements and understand them. If there are any discrepancies, they should be reported immediately.
Understand pensionable pay: Pensionable pay forms the basis of your pension benefits. It’s crucial to understand what constitutes pensionable pay and ensure its reported correctly.
Keep track of annual allowance: It is important to ensure your annual allowance position is in order. It is your responsibility for this to be correct. Do you understand the impact of scheme pays charges on your benefits at retirement? Are you owed any tax back? "We recently reviewed a clients full annual allowance position, when accounting for the remedy period following the McCloud judgement, the client will see a reduction in the value of annual allowance tax charges by £26,000."
Personal pension contributions: Understand how your personal pension contributions or FSAVC contributions interact with your NHS pension. There are great planning opportunities for medics who hold a personal pension or FSAVCs alongside the NHS pension. It is important to understand how best to utilise these pots of money.
Seek professional advice: If you’re unsure about anything, it’s always a good idea to seek advice from a professional who specialises in NHS pensions as the intricacies of the schemes can be challenging to navigate.
As noted above it is important to understand what constitutes pensionable pay and where errors can arise from.
Reasons to audit your pension record
You should consider completing an audit of your NHS pension record if the follow areas apply to you:
Have you worked part-time and has this been reported correctly? "We spotted an error with how part-time pay had been reported, the issue stemmed from being reported as an hourly rate not a session rate, resulting in the reported pensionable pay being wildly inflated. As a result an annual allowance tax charge of £20,000 was wrongly paid. The client will be able to claim back the full amount."
Are you on the correct pay increment? If you are a consultant, do you know how far up the consultant pay threshold you should be?
Have you had a management responsibility? Should this have been reported as pensionable or non-pensionable?
Have you received pay arrears payments? If so, your pension record should be adjusted so that the pay is credited to the correct year.
Are you a General Practitioner? Do you know if your record is up to date, what could a missing Type 1 Annual Certificate mean for your pension record?
These example highlight several of the top culprits resulting in errors within NHS pension records, but due to the complexities of NHS pension schemes, this list is not exhaustive. What often look like small clerical errors can have a detrimental impact on your retirement.
There are a multitude of areas that can impact your NHS pension record which is why it is important to ensure it is accurate. For support and to help ensure no costly errors are impacting your pension, please call 0808 144 5575 or email help@armstrongwatson.co.uk.
