Background
In the HSC Pension Scheme, the annual allowance is commonly worked out by the growth in your benefit in a particular year.
The limit for the tax year 2010/11 was £255,000. This reduced to £50,000 a year from 6 April 2011.
Subsequently, from 6 April 2014 the AA reduced to £40,000 a year.
The vast majority of HSC Pension Scheme members will not be affected. These changes will primarily affect high earners. However, this can vary depending on the length of pensionable service and the rate of pensionable pay increase in any particular year.
If you exceed the annual allowance you will need to declare your pension savings amount on your tax return and may have to pay any excess at your marginal rate of income tax.
The AA is calculated as the growth in your benefits in a year. The AA limit covers all your pensions, except your state pension, therefore all other pension savings need to be added together.
Please also familiarise yourself on further changes made from years 2015/16 and 2016/17.
In the event that you exceed the AA and are subject to a charge you may be eligible to opt for Scheme Pays. This is where a member elects for the relevant pension scheme to pay the charge on their behalf. The HSC Pension Service will only pay the AA charge if the scheme receives a Scheme Pay election notification and the member meets the mandatory requirements prescribed by HMRC. Where a Scheme Pays election is made, the member’s benefits are reduced in line with factors provided by the scheme actuary.
The factsheets and guides below provide further information about AA statements, charges and the Scheme Pays option:
- Annual Allowance Pension Savings Statement Guide
- Process For Calculating the Annual Allowance
- Tapered AA from 6 April 2016 Factsheet
- Tapered AA Example
- Tapered Annual Allowance Calculator
- Annual Allowance FAQ’s
- Exemptions from Annual Allowance Charge
- Annual Allowance - Additional Pension (AP) and Added Years (AY)
- Scheme Pays-Election Guide 2017/18 Onwards
- SPE2 2017/18 Onwards
- SPE2 Guidance & Completion Notes up to 2016/17
- Scheme Pays Election - SPE2 (up to 2016/17)
- Annual Allowance Notice 2021-22
Please find the link for the HMRC Estimator Tool
AA Timelines