In the HSC Pension Scheme, the annual allowance is commonly worked out by the growth in your benefit in a year. The annual allowance limit covers all your pensions, except your State pension, so your other pension savings also need to be added.
The limit for the tax year 2010/11 was £255,000. This reduced to £50,000 a year from 6 April 2011.
The vast majority of HSC Pension Scheme members will not be affected. These changes will primarily affect high earners (i.e. those earning over £150,000 a year). But, this can vary depending on the length of pensionable service and the rate of pensionable pay increase in any particular year.
If you exceed the annual allowance you will need to declare your pension savings amount on your tax return and may have to pay any excess at your marginal rate of income tax.
The AA is calculated as the growth in your benefits in a year. The AA limit covers all your pensions, except your state pension, therefore all other pension savings need to be added together. From 6 April 2014 the AA reduced to £40,000 a year.
Changes have also been made from 6 April 2016. It is important that you also read this information.
The factsheets below provide information about these changes and the steps that HSC Pension Service are taking to provide members with information if required.
- Annual Allowance Factsheet
- Annual Allowance Information Requirements
- Pension Tax Changes Presentation
- Annual Allowance - Member FAQs
- Annual Allowance Employer FAQs
- Annual Allowance - Ready Reckoner
A factsheet that includes a tool to determine whether you may be affected by the Annual Allowance
- Annual Allowance Example Calculations
A factsheet that provides worked examples of how the Annual Allowance is calculated
- Annual Allowance - Additional Pension (AP) and Added Years (AY)
A factsheet providing information about the Annual Allowance for those who have AP and AY arrangements
- Glossary of Annual Allowance Terms
A factsheet explaining the range of terms which are involved or connected to the Annual Allowance
We have also provided online estimator tools for members of the HSC Pension Scheme to use: