Last week the public sector pensions administrator warned GPs at risk from reductions in pension tax limits due to come into effect in April to seek professional advice or risk breaching the new limits.

From 6 April, the lifetime allowance (LTA), which is the maximum amount of pension savings that benefits from tax relief over a person’s lifetime, will be cut from £1.5m to £1.25m. Meanwhile, the annual allowance, which is the limit on tax efficient pensions savings that can be made in a year, will also be reduced from £50,000 to £40,000.

This means that GPs earning over £100,000 a year, or those earning £45,000 a year with over 20 years service who receive a significant promotion, are at risk of breaching the new limits and should therefore take advice to understand how they might be affected, the options available to them and the action they need to take.

Meanwhile, those nearing retirement should consider and discuss when they plan to retire, the amount of cash they plan to take, how their pay might increase in future, further pensions savings from other employers, dependents’ benefits and options for flexible working.

It is important for those close to retirement to do as much as they can to mitigate lifetime allowance liability by stopping contributions but this has definite implications for future pensions and should only be done after taking individual professional advice.

GPs are also reminded that the self-assessment tax deadline is this Friday (January 31), so if they have not already done so, they need to get their return filed online on HM Revenue & Custom’s website.