Each year the Pension Fund has a statutory duty to write to scheme members who breach the ‘annual allowance’ – that is the annual limit on pension savings that attracts tax relief in each financial year. If the value of pension benefits grows by more than the annual allowance (currently £40k) then the excess amount may be subject to a tax charge.
In certain circumstances the Pension Fund is required to make available a ‘Mandatory Scheme pays’ option whereby the member may request that any tax charge in excess of £2k is met by the Fund in return for the member accepting an equivalent reduction to their pension benefit.
The Pension Committee has taken the decision to extend the scheme pays facility to allow the member to elect for ‘Voluntary scheme pays’ where the tax charge is up to £2k. Further details may be found in the Nottinghamshire Pensions Committee report and Annual Allowance factsheet.
If any members are affected they will be contacted by the Pensions Office Technical & Communication Team by letter, and provided with the appropriate information to make a decision relating to their personal tax situation in advance of the tax return date.