HCSA Pensions Committee chair Dr Sarah Tennant gives an update on the 31st March deadline to get compensation for 2019/20 annual allowance charges
The Annual Allowance Compensation scheme is a one-off scheme compensating for pension tax charges incurred in the 2019/20 financial year. It was brought in by the Chancellor at the same time as changes to tapered annual allowance rules.
The deadline to apply for the scheme is 31st March. Earlier this month, NHS Pensions issued letters to those members who should have received a 2019/20 Pension Savings Statement(s), reminding them of the compensation deadline.
This applies to those who breached the standard annual allowance (£40,000) across one or more NHS Pensions schemes in 2019/20.
Even if you have received a letter, though, it does not necessarily mean you have a charge to pay. Many people will have “carry forward” – unused allowances from earlier tax years – available.
You can check your position using HMRC’s free calculator.
If you do have a charge and want to use the compensation scheme, you will need to use scheme pays. You can find information and application forms on the NHS England website.
Further information about annual allowance and contact details if you haven’t received the relevant pension statements can be found on the NHS Pensions website.
Pension tax is complicated and, if you are in any doubt as to your position, you should seek advice from an independent financial adviser with expertise in NHS Pensions.