Family Finances Guide: www.medicsmoney.co.uk/familyfinances
The journey of managing family finances can be particularly complex for those within the medical profession. In this two-part series, we’ve been guided through the maze of financial considerations tied to parental leave by Matthew and Cyra from the Medics’ Money podcast, who share invaluable insights and practical advice for medical practitioners.
Introduction
Hello, and welcome back to the Medics’ Money blog! As part of our ongoing series on financial family planning, we delve into the intricacies that medical professionals face when navigating parental leave. This discussion features the expertise of Cyra, a qualified judge accountant and doctor.
Understanding NHS Pension During Leave
A pivotal concern for many is how parental leave might impact their NHS pension. It’s essential to know that while on statutory or occupational maternity/paternity pay, contributions continue based on what your usual average earnings would have been. However, maternity allowance isn’t pensionable since it’s non-taxable. If you’re receiving maternity allowance due to insufficient employment periods, it’s worthwhile to inquire with NHS pensions about making lump sum contributions to cover potential gaps.
The Persistent Weight of Student Loans
For many medical professionals, student loans are a looming financial burden. Unfortunately, even during parental leave, if your earnings exceed the threshold, payments continue, and interest accumulates. This reinforces the concept of viewing student loans as a form of graduate tax rather than a traditional debt, given its often-insurmountable nature due to high interest rates.
Maximising Membership and Subscription Benefits
During parental leave, various professional subscriptions such as GMC, Royal Colleges, BMA, and medical defense organisations may offer significant discounts. It’s prudent to explore these options for potential savings, as maintaining these memberships supports continuing professional development through attendance at online conferences and meetings.
Childcare Financial Considerations
Childcare costs, especially in the early years, can be daunting. Tax-free childcare is an advantageous scheme, allowing you to receive government contributions matching your input, planned up to £2,000 per child annually. However, eligibility depends on your adjusted net income, which must be below £100,000. Planning for childcare well in advance is also advised due to lengthy waiting lists for popular nurseries, particularly those near hospitals or universities.
High Income Child Benefit Charge
The landscape of child benefit is nuanced, with reduced benefits once a household’s income surpasses £60,000, tapering off completely beyond £80,000. Nevertheless, it’s beneficial to claim for national insurance credits that safeguard against pension gaps, even when direct monetary benefits are forfeited.
Locuming During Leave
When considering boosting income through locum work during parental leave, be aware of restrictions. Engaging in locum while receiving statutory or occupational maternity pay may result in repayment obligations. During unpaid leave, however, locuming is permissible without penalty.
Working Less Than Full-Time
Adjusting work schedules to accommodate family life is becoming increasingly feasible and necessary. Financial entitlements such as special allowances for less-than-full-time work are provided to ease the transition financially. The nuances of calculating income from weekend and on-call duties remain specific to the actual hours worked rather than a simple percentage reduction.
Conclusion
In conclusion, whether you’re contemplating parental leave, calculating how it affects your pension, or exploring less-than-full-time working arrangements, careful planning and awareness of available resources can significantly ease financial stress. Cyra and Matthew’s insights serve as a vital resource for navigating these complex financial landscapes. For further information and detailed guidance, we recommend accessing the comprehensive PDF guide at the start of the article meticulously prepared by Cyra. For direct inquiries, the Medics’ Money team is available at [email protected]. Your feedback and questions are always welcome, and we look forward to continuing this conversation in future posts.
