Do you know what
deadlines are coming up for the Annual Allowance?

Our viewpoint

You might have seen reports in the press recently (eg from both Financial Times and Professional Pensions) regarding large tax bills for members exceeding the Annual Allowance? Two of the problems raised are members not realising there is an issue until after it is too late to ask their scheme to pay the tax on their behalf, or schemes refusing to pay the tax.

Fortunately there is still time to avoid these problems, but the first step is to understand what the deadlines (and the issues) are. We have prepared a handy high level summary to help with this (see our Pensions tax checklist.) In doing so, we’ve found that the issues are actually different this year as a result of the tapered Annual Allowance.

Hopefully everything is already in hand with issuing your pension savings statements for 2016/17; however that only the first step.  If you want to make sure everything else is covered off, here’s my 5 point action plan:   

  1. Ensure members are aware that they need to work out if they have an Annual Allowance tax charge to pay
  2. Know in what circumstances you are happy for your scheme to pay tax on behalf of members (“Scheme Pays”)
  3. Make sure members are aware of the Scheme Pays option (assuming you are happy to promote it – I think you should be)
  4. Ensure members know what the deadlines are – they will come round fast
  5. Ensure your scheme is ready to process requests and your administrators know the deadlines

Even if you are confident all these points were covered in communications you issued before, there is a material risk that your members have forgotten; and with member engagement a hot topic right now, you may want to consider how you can get prepared for the future too. One idea is to create a timetable for 2017/18 which includes what communications will be provided going forward, to reduce the risk of surprises.

If you’d like to understand more about the options you have and what others are doing please get in touch.

Access the pensions tax checklist

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