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Financial planning for hospital doctors working less than full time

With part-time training contracts in the NHS becoming more popular, have you thought about all the ways your finances will be affected?

More doctors than ever have been approved to train on a part-time basis. The British Medical Authority says 11.3 per cent of the junior doctor workforce in 2015 was engaged in “less than full-time training” or LTFT, typically working between 21 and 30 hours a week; that was up from 8.0 per cent in 2012.

Doctors apply for LTFT for a variety of different reasons, with applications in two broad categories considered. Category 1 is for doctors who are disabled or in ill-health, or who have caring responsibilities, whether male or female. Category 2 is for doctors who are pursuing personal or professional development opportunities – that doesn’t have to be medical; it could be anything from training for an international sporting event to working towards some type of religious role.

However, while LTFT works very well for many doctors, it also brings challenges. By definition, it will take longer to complete training and some doctors worry about whether they are taken less seriously than full-time colleagues. There are also considerable financial implications.

Most obviously, doctors on LTFT contracts will have lower incomes, since reduced hours will mean less take-home pay, though it may be possible to supplement your income with locum work; this is allowed if doctors are performing a minimum of 50 per cent of full-time training hours and have permission from their postgraduate deans to take on shifts.

Pensions are an important consideration too. You will still be eligible for membership of the NHS Pension Scheme and it makes sense to take up this right. Members of the NHS Pension Scheme build up rights to a guaranteed, inflation-linked lifetime pension in retirement partly based on how many years of scheme membership they have, so joining early can be very valuable.

Check what pension contribution you will be expected to make. Contribution rates in the NHS Pension Scheme vary according to your pay, increasing as members’ earnings go up. An NHS employee earning between £21,478 and £26,823 a year, for example, pays 7.1 per cent of pay, but this rises to 9.3 per cent for those earning £26,824 to £47,845. Importantly, however, your rate is calculated according to your full-time equivalent pay, not your actual earnings. So if you’re a doctor on an LTFT contract for 50 per cent hours and earning £19,000 a year, you’d pay the higher rate, since your full-time equivalent pay would be above the threshold.

The other pensions issue to consider is that the lower contributions you make during periods on LTFT will have an impact on your final retirement income – the pension benefits you’re building up will effectively be reduced for periods when you were paying less than full time. You will need to think about how to bridge this gap, either now or in the future.

Finally, consider protection benefits too, which protect you or your family in the event of your death or a period of ill-health that prevents you working. You will get some life insurance from your NHS Pension Scheme membership, but it’s important to understand whether you have all the protection you need. If one reason for training on part-time basis in the first place is that you have caring responsibilities, it’s especially important to make sure you have protection in place for those you’re looking after.

The financial implications of an LTFT contract, in other words, may be more complicated than at first meets the eye. It makes sense to take independent financial advice from a specialist who can look at all of these issues in the round; that might not seem like an urgent priority for doctors with busy lives and family commitments but good advice will be invaluable over the longer term.

We have helped more than twelve thousand doctors to plan for a successful future.

At Chase de Vere Medical, we take the time to understand you and your goals, then our specialist advisers will help you to create a plan to achieve them.

Content correct at time of writing and is intended for general information only and should not be construed as advice.

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