Dental specialist financial adviser Katherine Hill, for Wesleyan Financial Services, discusses what dentists should be thinking about when it comes to maternity and paternity leave.
Having a baby is an exciting and significant life event and period of change, however, it means taking time off work and adapting to your new arrival – this makes it important to plan ahead to ensure that you are financially prepared.
There are many things to consider – taking parental leave will invariably reduce your income, making it important to understand exactly how you will cover this period, and as a self-employed dentist, what you are entitled to.
I would also encourage my clients to consider the wider picture beyond maternity/paternity leave and to think about how your financial situation is likely to change over the years following the arrival of your baby. Having a review of your current set up and thinking about upcoming changes such as reduced hours, or childcare when returning to work and how this will impact your income. Being in a well-informed position can help to ensure that you are prepared and protected for any unknown eventualities.
What are you entitled to for parental leave?
When on parental leave as an associate dentist, it’s important to be aware that some people may be eligible for NHS parental leave benefits, but many may not be. Being clear on your entitlements is a good starting point when it comes to planning.
NHS dentistry and parental leave
If you are an NHS dental performer, provided you have met the qualifying criteria, you should be entitled to 26 weeks of maternity leave.
The criteria includes the following:
- You have been on the NHS dental list as a provider or performer for a period of at least two years – the foundation training year is taken into account. The last 26 weeks must have been continuous and immediately prior to the 15th week before your baby’s due date. Effectively this means that you must have been on the NHS dental list, prior to becoming pregnant.
- You have reached the 11th week before the week you are due to give birth.
- You don’t carry out work during your maternity leave.
- You are not registered as a limited company.
As a dentist working in an NHS practice, you do not have to be an active member of the NHS pension scheme to receive parental pay. However, it is important to note that any associate dentists registered as a limited company and receiving their NHS pay into their limited company, will not be eligible for parental pay – there is a trend for some dentists to use limited companies due to potential tax saving advantages, however this means that they will lose a number of NHS benefits. This is something to factor into planning.
Statutory maternity allowance
Self-employed dentists are entitled to statutory maternity allowance for up to 39 weeks if they’ve been registered as self-employed with HMRC for at least 26 weeks in the 66 weeks before the baby is due, and in addition, have paid class 2 National Insurance for at least 13 of the 66 weeks before the baby is due.
Should I defer my income protection?
Some people choose to take a break from paying for their income protection (IP) during maternity or parental leave, as they will be giving up work for several months and are likely to be on minimal income. Depending on the plan, there may be an option to suspend cover for maternity or paternity leave for up to 12 months.
This, however, should be thought through very carefully, as the individual needs to be fit and healthy before they return back to work to be able to restart the plan. Therefore, they are taking a risk in terms of any potential health complications related to childbirth.
I would also note that another consideration to bear in mind in the case of illness or complications, is the length of time of the deferred period of the IP plan – this is a period of time when you are unable to work because of illness or injury where no benefit is paid out. Active NHS dentists may benefit from sick pay through the NHS, whereas a private dentist will not. Typically, in my experience, most dentists will not want to rely on savings for any extended periods of time, making it important to factor this into planning.
How do I ensure my family is protected if the unexpected were to happen?
It is generally an uncomfortable topic for most people to think about, but what would happen if one of the parents or caregivers were to die? Would the remaining care provider be able to cover all the monthly expenses and look after the child? There are expenses that come with everyday life and if it is just one person providing for a baby or young child, they may need to reduce their hours to be available for school pickups, nursery etc, meaning that there is a drop in income and extra funds may be required. This is where it can be useful to have a full review of the employment benefits of both parties to evaluate what would and wouldn’t be covered.
It is especially important for dentists who are not entitled to NHS benefits such as sick pay and death benefits as they would need to carefully look at bridging those gaps.
How can a review with the experts help?
Seeking professional support from a dental specialist financial adviser can be useful for dentists planning to start a family, providing support and guidance to help effectively plan ahead for the inevitable career breaks when having a baby.
A dental specialist financial adviser understands the career path of a dentist, their often-complex income patterns, as well as the intricacies of the NHS employment benefits, and can help you to identify where there may be gaps, what the consequences of those gaps may be, and to look at ways as to how these can be addressed.
Wesleyan Financial Services is a broker and insurance products are provided by a number of selected insurers.
For further support and guidance to plan for the financial year ahead, speak to a dental specialist financial adviser at Wesleyan Financial Services by booking a no-obligation financial review or calling 0800 316 3784.
