Associates’ pension tension: are you missing out?

The last thing you’re going to be thinking of when you start your first job is saving for your retirement. Most of us will put off such decisions because we have plenty of time to save for those golden years, don’t we?

This is an understandable reaction but in the past few years the BDA has come across several cases of younger members in the UK who have opted out of the NHS pension scheme.

The BDA’s research team has investigated a host of factors that could have a bearing on this, and also carried out a survey of associates (BDA members) who have qualified since 2006 to establish their pension choices and what they thought of the NHS pension scheme. We also asked the NHS pension agencies throughout the UK for data on trends to see how many associates were actually opting out, though the data itself was inconclusive.

As the recording of net pensionable earnings is not an automatic process in England and Wales, the BDA invited the Business Services Authority for England and Wales to tell us how many associates they had recorded on their database, and out of those associates, who had net pensionable earnings recorded against them. They told us that around nine per cent of associates did not have net pensionable earnings. We were concerned and wanted to know why this was the case.

We looked at dentists who qualified since 2006, and took this as the baseline to assess how many years associates had been of the scheme, and/or whether they had opted out of it at any stage. The BDA’s survey revealed that eight per cent were not currently members of the scheme, while an additional six per cent had opted out since 2006 but re-joined later.

The reasons for opting out ranged from needing the money for contributions now rather than at retirement, working solely in private practice, being unable to remain a member of the scheme due to incorporation (operating as a company instead of a typical self-employed associate arrangement), or having plans to leave England to work overseas.

Some members thought the scheme was expensive and not as good as it was in the past. However not everyone shared such a negative view, and many respondents indicated that they thought the NHS pension scheme was a ‘good’ one. Some believe the scheme offers security and ‘good returns’, while others regarded contributions from employers as a key benefit of the scheme.

A willingness to contribute to any pension scheme is also likely to be influenced by your knowledge of it. The BDA research uncovered that more than half of associates surveyed did not appear to understand it well. This is worrying and the BDA are on a mission to clear the waters.

To improve clarity for associate members we will work with the NHS pension agencies in the UK to ensure that they provide enough information so that members can make an informed decision on their NHS pension choices.  We plan to raise the profile of pensions at the British Dental Conference and Exhibition, as well as through our advice and publications. We’re also looking into including pensions in future dental foundation training events.

Our website has guidance on the scheme in general, for BDA members, both for quick reference and some more detailed guidance. If you need one to one advice, as a BDA member you can speak to our pensions advisor on 020 7563 4550.