Advisers could benefit from the government's tinkering with pension tax as there will be an increased need for advice if rules are changed to let doctors set their pension contributions on an annual basis.
Officials from the Treasury and the department of Health and Social Care announced today (August 7) that a further consultation on the rules of the NHS Pension Scheme will soon be published, replacing the document published two weeks ago.
Starting from the next financial year, the government wants to allow doctors to set their level of pension accruals themselves at the start of each year.
Under this rule change senior clinicians can set any percentage for contributions and accrual rate, in 10 per cent increments, depending on their financial situation.
But to be able to set this accrual rate effectively, doctors might need help from a financial adviser, according to Sir Steve Webb, former pensions minister and director of policy at Royal London.
Sir Steve said: “The proposed changes will create a huge need for high quality financial advice.
"Doctors will now face an annual choice of contribution rates between 0 per cent and 100 per cent and may have to review their decision late in the financial year.
“Decisions to give up valuable pension rights should not be taken lightly or hurriedly and there is a risk that new options will be available before the necessary advice infrastructure is in place.”
Rachael Hall, independent financial adviser at Circle Financial Services, agreed.
Ms Hall said: “Unless the NHS provides advice, doctors are going to struggle to determine what the optimum level of pension contribution is."
She said the NHS may have to invest in an online tool which allows doctors to play around with different contribution levels and to see what the outcome of each would be.
She added: “These rule changes will affect a large amount of people so a significant level of advice and planning will be needed.”
Ms Hall, who is a specialist in advising on the NHS scheme, said the government had to help fund an advice solution as there were not enough advisers that are equipped to offer advice in this industry.
She said: “There’s only a few advisers in the UK that can do complex calculations such as finding out what the optimum contribution could be, so it will be difficult to service the mass population.
“The government needs to provide support to advisers and tax advisers as there is only a handful of us that can help.”
Baroness Ros Altmann, a former pensions minister, agreed that the NHS should provide doctors with this type of advice.
She said: “All staff should be offered access to advice from independent financial advisers who understand the workings of the NHS scheme and can help them plan their work and pension.”
But Tim Holmes, managing director at Salisbury House Wealth, pointed out that doctors may not be able to take the time out of their work schedule to seek advice and decide their own contributions.