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What does Omega offer to Dentists?

Our experience dealing with Dentists has demonstrated that there are various areas of service required by members of the profession when optimising their financial resources. As a direct result of this experience with IDA members we have come up with a tailored Financial Health Check which addresses their unique needs.

Please feel free to download the Financial Health Check here to aid your financial review.

While the Financial Health Check addresses many areas from Personal finances to the finances of the Surgery there are three key areas where we have found IDA members need the most advice.

This type of insurance is designed to cover you in the event of your being unable to work due to illness or injury. You can cover up to 75% of your income up to a maximum of €175,000 per annum. There are two main types of Income protection available to Dentists, one with a deferred period and one without. Each type is explained below;

No Deferred Period – UK Based
This type of Income Protection pays out from day 1 of you being unable to work. There have been instances of Dentists claiming of being unable to work due to flu etc. for even a number of days. There are two main providers of this cover and both are from the UK, Dentist Provident and Dentist and General and we can provide both for Dentists.

Both providers are very reliable with claims however a disadvantage they have relative to their Irish counterparts is that you won’t receive Tax Relief on your premiums. However, this is counteracted somewhat by the fact that under current tax law you won’t have to pay tax on a claim.

Deferred Period – Irish Based
With this type of cover you can choose to delay receiving payment (the deferred period) for a minimum of 13 weeks, 26 weeks or 52 weeks. The premiums on this type of cover are tax deductable which makes them attractive although claims are taxable from the beginning of a claim

Both types have their merits and we are happy to recommend to Dentists that a combination of each is the most suitable approach. This is a complex area which one of our experienced consultants will be delighted to detail further to address individual needs.

Experience to date
Our experience to date in dealing with dentists and retirement planning has been that many have been making contributions to pension funds with the primary motivation of reducing their tax bill rather than using their pension fund as a method of retirement. While reducing your tax bill is undoubtedly an important factor, it should not be the foremost motivation for investing in a pension. You should have a clear focus on what kind of income your pension will provide for you. After all, we will all be reliant on our pensions to continue the lifestyle achieved while we were working. We all spend more money during our free time and it would be nice to have the reward of a good income when we retire rather than being anxious about the cost of living.

Investing wisely
We have also noticed that many dentists have a vast array of different pension policies with different companies invested in many different ways. There have been instances where some dentists have more than 20 different policies that have been taken out on a once off basis over many years! This type of ‘scattered investing’ creates confusion on two different levels. Firstly, it makes it complicated to assess the overall valuation of the funds, and secondly, it makes it difficult to ascertain where the funds are invested and what the overall risk rationale of the funds are.

Attitude to risk
Another area of difficulty encountered is where dentist’s pensions are invested in much riskier funds that they realise, or than they should be. Some 10-20% of a dentist’s pension fund should be moved to secure investments during the last five to 10 years of his or her career; this has not been the case in many instances.

Organisation
In a lot of cases, organisation is the solution to the problems that dentists have with their pensions. Making monthly contributions with a target retirement amount in mind would help greatly in creating clarity. Also, using one pension company to manage it all by means of a self-directed vehicle can give the stability and the variety of investment options that is required.

Aiming to have at least €1.5 million in your pension fund
It is our recommendation that a 40-year-old today should aim to have at least €1.5 million in their pension fund at retirement. When you retire, The Revenue will allow you take 25% of your pension fund out tax free. You will be allowed to invest the balance in retirement funds to provide an income. If a person takes an income of 6% of the remaining €1,125,000, this will amount to a pension of €67,500 per annum. Admittedly, family costs may well have reduced, and mortgages, etc. will probably be gone at that stage, but this is still a significant drop from most dentist’ current income.
Research among the professions shows that, as with society at large, a high proportion of self-employed people do not have adequate pension arrangements in place. Our rationale in recommending a self-directed pension fund to the self-employed is that it allows people to invest their own funds as they see fit in whatever asset they would like.

Self-directed pensions – take control of your fund
The self-directed pension scheme was designed to give the self-employed much greater levels of control and influence on how their funds are invested. For example, some people may wish to select particular companies in the stock market, or indeed to purchase property within their pension fund. Since the launch of this pension product, we have had a very large response and there are a number of key areas that seem to be attracting people’s interest.

Investing in property
Although property markets are currently uncertain both here and in the UK, purchasing an investment property is still very attractive, particularly using pension funds. An individual can purchase a property in Ireland or the UK and mortgage up to 75% of it. The rental income receivable is paid into the member’s retirement fund and is used to pay off the mortgage, which has a maximum term of 15 years. It is a very attractive concept for many people to think that they could have a property within their pension that is completely paid off after 15 years.

Moving existing pension funds
We have also experienced a very large number of enquiries from members who have existing pension funds invested in a variety of locations. These have been either in Ireland or the UK, and many members are confused about the best course of action for them to take. The good news is that both Irish and UK funds can be moved into this pension, and they can then be invested as the individual sees fit.

Is pension investment worth it?
Apart from saving for your retirement, investing in your pension fund is one of the most tax efficient things you can do. Depending on age, an individual can invest between 15% and 40% of their income in a pension and receive tax relief on it.

What other dentists have said about Omega’s Pension service
"Omega also gave me valuable advice on my pension. I had thought about topping up my pension but Omega advised me to hold off on doing this for some time as I ran the risk of over-funding. They could very well have sold me a product, but instead offered me sound independent advice, re-assuring me that they had my best interests at heart. I now confidently recommend Omega to friends and colleagues, and look forward to employing their services for many years to come."
Dr. Patrick Quinn, Dental Surgeon