NHS Added Years 31 March Deadline - Hot Topics Q & A

Q. I am a 41 year old dentist with a healthy NHS income. I qualified late and also had a 1 year break in my 30s when I went to Australia. I have worked out that I am therefore 7 years short of the important 40 years target that my colleagues are always talking about by age 60.

I am thinking of buying Added Years, but am aware that they are expensive and once committed you can’t get out. It also involves a bit of a rush as you need to buy them by 31st March. This is to do with the NHS Pension scheme changing I think.
   
What are your thoughts?  

A. This subject has cropped up several times lately. When talking about Added Years, we always start by saying that it is vital clients do not get  too attached to achieving the 'magic' total of 40 years service. This is because the 33-37 years most clients attain, can often be enough, along with other investments, to give them the income they need. Also, any income above circa £40,000 pa is taxed at their highest rate - 40%.

The timescale to do your homework on this of course is not good! However, having checked this out, we would recommend that you request the NHS to calculate what you can buy by the end of March, even though you say your birthday is the 21st April. Normally you would need to start buying the years the day before your birthday, and are then not able to change your mind.
   
However, we have been assured that if, say, you make your mind up to buy in May/June, then you will still be ok to do so, although payments would then be backdated. If you decide not to go ahead, then no problem.
   
So, please ensure you request this by end of March. Secondly, work out what you really need in retirement, and we would always recommend that you ask your Financial Planner to build you a cash flow forecast mapping out what you really need. After all, if you have no measurement then how can you decide?

Getting this wrong could be very expensive, so best of luck.