What is the best retirement savings product for a Doctor?
In general, a personal pension plan or PRSA is the most appropriate product for General Practitioners (GPs). However, we must also consider that certain GPs may already be a member of the GMS Superannuation Plan run by the HSE.
What is the GMS Superannuation Plan?
In order to join the plan doctors must have a GMS list. These doctors are in receipt of Capitation Fees. These are payments coming from the HSE relating to the medical card holders that the GP has on their GMS list. The payments are related to the age and gender of the medical card holders rather than the number of visits to the surgery.
The GMS pension is calculated on the capitation payment and chronic disease management fees rather than the full GMS payment. GPs pay 5% to the Superannuation Plan and the HSE pays a further 10%. The scheme is administered by Mercer.
Is there scope for GPs to save more beyond the GMS Superannuation Plan
That depends! GPs are subject to “Dual Income Rules”. If a GP is contributing to the GMS plan, then the income they receive from that is always counted first against the earnings cap.
It also helps to have an idea of how much you will need in retirement.
Show me an example!
Doctor Ryan is a GP aged 47 with total taxable income of €175,000 (comprising €80,000 GMS income and €95,000 private practice income). Based on her age, Dr Ryan can contribute 25% of total earnings but total earnings for tax relief purposes are capped at €115,000.
Total contributions permitted for tax relief are (25% of €115,000): €28,750. Contributions to the GMS plan are (5% of €80,000) are €4,000. This leaves €24,750 space for further contributions.
This may be done as €16,000 as an AVC and €8,750 into personal pension plan or PRSA.
The AVC may be done into the GMS plan or an AVC PRSA.
What do I do next?
If you are interested in getting on top of all your financial needs, get in touch with AM Financial and we can discuss.