Laura Teehan, specialist financial adviser at Wesleyan Financial Services, shares the key areas to focus on to protect your financial security through the NHS to private transition.
Deciding to leave the NHS, either partially or fully, can feel like a big decision and there are many moving parts to navigate simultaneously. Not least of which is navigating risks to your financial security, from both a personal and practice perspective.
Here the obvious spring to mind, such as replacing NHS income, calculating private fees and quantifying the level of patients required to make the change a success. Fortunately, there are plenty of resources and expertise to tap into with these particular financial implications.
However, there are lesser-known risks and opportunities lurking in the background which impact financial security throughout this change to be aware of. Here are some protective measures to put in place ahead of your conversion:
Personal financial protection
When you work as part of the NHS, you receive a significant basket of financial benefits, including the gold-standard NHS pension scheme (NHSPS), sick pay, death-in-service benefits and more.
Depending on the scale of your conversion (partial or full), your entitlement to these will reduce or cease completely (although your contributions to your NHSPS up until the point you leave will continue to accrue in the background).
Any delay in replacing benefits will, in the case of the NHSPS, result in a cost of delay, or in the case of sick pay, leave you vulnerable should the unexpected happen.
The NHSPS in particular is a complex benefit to replace and is unlikely to be matched by a single financial product like a personal pension. It may take a combination of savings, investments and a personal pension to maintain the pension provisions that you were saving in the NHSPS to give you the lifestyle you want in retirement.
To protect yourself in case of illness or injury, look for a 5* Defaqto-rated income protection policy, alongside critical illness cover. Defaqto provides an independent, expert assessment so you can see the quality of products and policies at a glance.
Finally, ensure that your cover includes an own-occupation clause. This means that should an illness or injury occur that prevents you from working in dentistry, the insurance provider can’t reject your claim due to being able to take up a new occupation which could offer significantly less income.
Protecting you practice
Moving from NHS to private provides the opportunity to review and sort various insurance policies that the practice may have to ensure they are still fit for purpose and in line with the new direction of the business.
The last thing a practice owner will need when already facing significant change is to find out that the insurance policies don’t cover unique risks that apply to dental practices.
Then, if you are faced with that rainy day when something goes wrong, you’ll find out too late that you aren’t covered.
Equally, you don’t want to over-insure or pay over the odds for your insurance policies, particularly when dealing with increased operational costs and energy bills.
Good opportunity
It’s also a good opportunity to look at your partnership agreements and associate contracts. This is not an exclusive recommendation to practice owners who are looking to make the NHS to private move.
However, as it’s a new direction for the practice, it’s a good opportunity to clean up the legalities that underpin how the practice and staff operate.
That way you can move forward without uncertainty about the succession of the practice should, even though it’s difficult to think about, one of the partners in the business die or suffer a critical illness. Also, it gives you and your associates confidence about self-employed status.
Now might be the time to look at introducing an overlooked type of cover called key person insurance. This could be beneficial if you rely on particular members of the practice team.
For example, a specialist who brings in a significant portion of the practice income or perhaps a practice manager whose absence will result in a financial loss in the business.
This kind of insurance can provide a safety net for your practice against the financial impact of critical illness or the death of a key employee.
Seek support from specialists
If any of the points for consideration are leaving you feeling concerned or confused about your practice’s financial stability, you can book a no-obligation review with a specialist financial adviser at Wesleyan Financial Services by visiting www.wesleyan.co.uk/campaigns/dental or calling 0800 316 3784.
Advice is provided by Wesleyan Financial Services Ltd.
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