Pension saving statement
July 24, 2013
Beginning in July the NHS pension agency will start to issue pension statements for those who they believe were affected by the reduced annual allowance in 2011/12 and 2012/13.
To recap, the annual allowance reduced to £50,000 from the 2011/12 tax year and currently still stands at this level. From the 2014/15 tax year the annual allowance will be reduced further, to £40,000.
The growth in your NHS pension savings is a complex calculation based on dynamised career earnings and your pension record; both in officer and practitioner posts, and also factors in other elements such as added year’s contracts and an inflation offset.
Those whose pension growth is in excess of the annual allowance potentially face a tax charge, which is known as the Annual Allowance Charge (AAC). The AAC is payable on the excess of the growth in your pension savings over and above the annual allowance, less any unused allowances available from the previous three tax years.
Given the interaction between dynamisation within the scheme and the inflation offset allowable from HMRC, the amount of pension growth can vary significantly, if you do not receive a statement the indication is that you are not affected by the AAC. However, we have already found that NHS Pensions records are far from accurate.
In addition, NHS Pensions will not be aware of any supplemental personal pension arrangements you may have in place, which, when taken into account with the growth in the NHS scheme, may put you above the allowance.
If you do receive a statement, or would like to discuss this area with one of our experts, please do not hesitate to contact 01772 821021 / 0115 972 1050.