A common enquiry over the last few years is a request for us to ‘sign a form’ to cash in or transfer a pension in its entirety into a bank account.

Often, we are contacted by people who simply do not understand that there are often better ways of taking pension. Whether it be using ‘guarantees’ associated with their pension that they were not aware or exploring options such as buying an annuity or flexible drawdown.

Whilst it may appear like the easy option of cashing in your pension, you have to consider that a full encashment will often mean a large ‘emergency tax’ bill of at least 20% of the fund value (after tax free cash).  Often the cashed in pension will sit in a bank account earning little or no interest. Not to mention the ‘opportunity cost’ of reducing the figure that gains interest by 20% paid out in tax.

If your pension is in a ‘pot’ which is invested on the stock market, it usually means it can be switched into a ‘Flexible Access’ or ‘Drawdown Pension’.  This means that the pension becomes flexible, meaning it can provide an income, or lump sum, or both. It is also accessible for the term of the pension and doesn’t tie money up like an annuity.

It is always recommended that at the point of retirement, it is worth speaking to a good independent financial advisor about your options.

NHS England currently provides practices with basic cover for GP’s that are off sick. If a GP is away from the practice due to illness for more than two weeks and the practice provides invoices showing the cost of cover for him/her, these costs should be met by the NHS.

 However, the NHS will only pay up to certain amounts, so if a locum costs more than the set limit there will be a shortfall for the practice.

• The NHS will pay up to £1,751.52 per week in England for the first 26 weeks and then for the following the 26 weeks the payment is cut by half to a total payment of £875 per week.

• If a practice arranges locum insurance at £2500pw for their GP’s and one of them goes off sick for more than two weeks the NHS will pay for £1751, on the basis that invoices can be provided, the locum insurance policy will pay the remaining £749. If the GP is still absent after 26 weeks the NHS will then pay £875, and the locum insurance policy will pay £1625, to ensure that the GP is covered up to £2500.
• The NHS payment must be supported by invoices, if the practices is unable to provide the necessary invoices, the payment from the NHS will be delayed.
• The NHS reimbursement scheme only covers GP’s in the practice, not other essential practice staff, such as Nurses. The NHS does not currently cover for other absences, such as, Jury Service or Compassionate Leave either. 

Kind regards,

Chris Dixon BSc (Hons) Dip PFS

Director of Approachable Finance and Approachable Locum Insurance