This is a reminder that the standard LTA is to reduce from £1.5m to £1.25m from 6 April 2014.
This means a standard LTA of £1.25m will apply to members who become entitled to receive (crystallise) their HSC benefits when they:
• retire on or after 6 April 2014 – and the date their benefits are authorised is before this date
• retire before 6 April 2014 – and the date their benefits are authorised is on or after 6 April 2014.
For all scheme members the percentage of LTA used will be based on £1.25m unless they hold fixed protection. In addition, for higher earning scheme members any LTA charge that may apply to their HSC benefits will also be based on the reduced LTA unless they hold a valid protection certificate from HMRC. Any delay in claiming benefits may therefore result in:
• a bigger percentage of the LTA being used up – LTA charges may then apply if there is a later benefit crystallisation because there is insufficient LTA remaining
• high earning scheme members – may become subject to LTA charges or see those charges increase.
It is important to note that HSC Pensions has no discretion on the date HSC benefits crystallise and the calculation of the LTA used.
Members who wish to have their benefits assessed against the LTA of £1.5m must have a last day of membership of 4 April 2014 or earlier, therefore their completed application form must be received by HSC Pensions at least three months before the intended retirement date.
This is essential for those members who hold an Enhanced Protection certificate from HMRC as there is a requirement on HSC Pensions to check for Relevant Benefit Accrual (RBA) before HSC benefits are authorised. Where HSC benefits fail RBA the member may have scope, within the Scheme’s Regulations, to ‘rearrange’ those HSC benefits in order to remain within RBA limits and keep their Enhanced Protection before they are authorised.
Information about Relevant Benefit Accrual (RBA) is available on the website at:
Members should consider how they might be affected by the reduced LTA, particularly if they are planning to retire during:
• the last quarter of 2013/2014
• the first quarter of 2014/2015.
This includes members who have already confirmed their intention to retire.
It is the responsibility of employers to ensure that for those members who give late notification of retirement, that their application for benefits be processed without delay ensuring that the member’s pension record is up to date. HSC Pensions will not accept responsibility for any delay if the application:
• is incomplete
• is inaccurate
• is from a member with enhanced protection
• does not reach this office with sufficient time for the awarding process to be completed and benefits authorised before 6 April 2014.
Any revision to benefits (substitute awards) that is authorised on or after 6 April 2014 will be a separate crystallisation of benefits and based on the lower standard LTA of £1.25m.