The Scheme is a registered scheme for HM Revenue & Customs’ (HMRC) purposes. As a registered scheme, it enjoys several tax advantages. Consequently, HMRC impose limits on the amount of pension savings you can make each year and build up over your working life.
It is your responsibility to ensure you monitor and understand how your pension savings may be affected by the allowances imposed by the HMRC.
The Annual Allowance is a limit on the amount of pension savings that you can build up that may qualify for tax relief. The period over which this is measured is known as the Pension Input Period (PIP) and runs from 6 April to 5 April.
The current Annual Allowance is £40,000. You can carry forward unused allowances from up to three previous years.
Please note your Annual Allowance may be reduced if one of the following statements are applicable to you:
Your total annual taxable income in the relevant PIP plus any pension savings you make during the PIP exceeds £150,000
You have chosen to take benefits from an authorised pension scheme as a taxed cash lump sum or
You take income drawdown or a short-term annuity (or an annuity capable of reducing).
If contributions made by you or on your behalf into your Personal Account during a PIP exceed the Annual Allowance you may be liable to an additional tax charge.
Please be aware that if you have registered for fixed or enhanced protection from the Lifetime Allowance charge, joining the Scheme may invalidate your protection.
As you will be automatically enrolled into the Scheme when you join the Company, if you want to retain any protection you have previously applied for, you may need to opt out of the Scheme. If you opt out within one month of being enrolled, HMRC will treat you as if you had never joined the Scheme. For more details see Opting Out.
If you think you are affected by this, you may wish to obtain independent financial advice before taking any action. If you do not have a financial advisor, details of those near to you can be found at http://www.unbiased.co.uk.
Normally your contributions to the Scheme are made before the deduction of income tax. If you participate in Pensions Plus, your salary is reduced by the amount of your Pensions Plus contributions. As a result, you and the Company may pay less in National Insurance contributions.