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EPN364 - Annual Allowance Statements

Audience: This Notice will be of particular interest to:

  • HR Managers and Shared Services providers

Action: To note that;

  • some senior staff will be receiving letters informing them of potential tax charges due to pension accrual in 2011 and/or 2012
  • To prepare for questions from staff that may be prompted by the communication

Timing: Annual Allowance statements will be sent September 30th

Background

  1. The Principal Civil Service Pension Scheme will be sending out letters to members who may face a tax charge if they accrued a large amount of pension in either 2011 or 2012. It is important that members take action following receipt of the letter.
  2. Members who will be receiving the letter are likely to include those with high salaries and with long service in the scheme who experienced a large increase in salary in 2010, 2011 or 2012. These are a consequence of HMRC legislation concerning the
    pension Annual Allowance affecting all pension schemes, both in the public and private sectors. An example of this statement can be found at Annex A along with a information sheet which will be included, this can be found at Annex B.
  3. The letters will be sent out between 30 September and 6th October.
  4. Impact on members
    Members will need to use the information from the statement(s) in the letter to assess whether or not they have a tax charge to pay. If there is a charge to pay, individuals will need to make arrangements with HMRC to pay the charge via self-assessment. We expect that most members will not have a charge to pay but as tax affairs are the responsibility of the individual it will be for the individual to determine this. Should individuals have significantly large charges, the member may be able to use the
    Scheme Pays process (pay charge by reducing pension) and should contact MyCSP for further information.
  5. If employees approach you with questions following receipt of the letter, you may wish to direct them to MyCSP. MyCSP have ensured that telephone operators are aware that members may contact them with Annual Allowance queries after receiving Annual Allowance statements and will be able to answer common questions. Specialists will be available to deal with more complex member queries.
  6. MyCSP are considering offering employers a service to assist some or all employees affected by the Annual Allowance. The charge for this would be paid separately to normal employer contributions. If you would like more information about this
    opportunity, please contact SMEEmployers@cabinet-office.gsi.gov.uk
  7. Tools available
    A slide pack (Annex C) is attached for your information which may help you to understand the changes and anticipate any questions. You will also find a video that explains these slides in more detail – a link can be found at on the Civil Service website.

Contacts

Enquiries regarding content please refer to Scheme Management Executive SMEemployers@cabinet-office.gsi.gov.uk