Age discrimination and annual allowance
If you are a member of the Firefighters’ Pension Scheme or the Police Pension Scheme, you may be affected by the Age Discrimination Remedy (also known as the McCloud or Sargeant Remedy).
Contents
You will be able to choose whether to receive legacy or reformed scheme benefits for your membership during the remedy period (1 April 2015 to 31 March 2022).
| Scheme benefit type | |
| Legacy | Final salary schemes that were in place before 1 April 2015 |
| Reformed | Career Average Revalued Earnings (CARE) scheme, introduced as part of the public sector pensions reforms from 1 April 2015. |
How does this affect my Annual Allowance?
The annual allowance is the maximum amount of pension you can build up each tax year across all your pension schemes before you have to pay a tax charge.
The standard annual allowance for the remedy period was £40,000. It then increased to £60,000 from 6 April 2023. If you had pensionable service in the remedy period that was rolled back, the rollback may have changed the amount of pension you built up each year. This may affect your pension tax position for one or more of the tax years in the remedy period.
Many members who have been rolled back will not see any change to their pension tax position, but some may see a change to their pension tax position, particularly if they exceeded their annual allowance in one or more of the remedy period tax years.
You may already have paid a tax charge during the remedy period which needs revising, or you may owe tax for the first time.
HMRC has defined tax years within the remedy period as being in scope or out of scope as follows:
Out of scope tax years
For these tax years, no new or increased lifetime allowance tax charges will become payable, but members will be able to claim compensation for any overpaid annual allowance charges.
In-scope tax years
For these tax years, members will need to pay any new or increased allowance tax charges, and will be able to claim compensation for any overpaid annual allowance charges.
*2022/23
Although the 2022/23 tax year was outside the remedy period, it is included as an ‘in-scope’ year as it started before rollback occurred on 1 October 2023.
Frequently asked questions
If you have been affected by rollback and annual allowance, we’ll send you a remediable pension savings statement for the tax years in the remedy period.
This will include your recalculated pension input amounts for the remedy period tax years, plus the pre-rollback Pension Input Amount (PIA) and any scheme pays elections you have made.
Once you have received your Remedy Pension Savings Statement, you will need to use HMRC’s Digital Service Calculate your public service pension adjustment to calculate your public service pension adjustment. This will help you determine whether you have any new or revised tax charges as a result of rollback.
HMRC can only collect tax owed from ‘in scope’ tax years where you have underpaid your annual allowance charge following the impact of rollback. To pay any new or increased annual allowance tax charges (for in scope years), you will need to use the HMRC digital service.
This is charged at your marginal rate of income tax for the relevant tax year.
Please note, you should not amend any previous self-assessment returns after the scheme years.
How do I pay the extra tax charges
If you have extra tax charges to pay for the tax years 2019-20 through to 2022-23 and you choose to pay these yourself, you will receive a notice for this by post.
If you would like the scheme to pay the charges on your behalf and reduce your pension savings to cover the cost, this is known as Scheme Pays. You can now make your Scheme Pays request through the HMRC digital service and they will share it with your scheme manager directly.
You can use the HMRC digital service to calculate whether you have previously overpaid annual allowance charges. If you have overpaid, you can make an application for compensation to cover this as follows:
- For in-scope years, you will need to apply to HMRC directly by using the HMRC digital service.
- For out-of-scope years, you will need to apply the scheme manager of your brigade or force
If your pension scheme paid the tax charges on your behalf, HMRC will send the details to them so they can increase your pension benefits. This will cover the amount of overpaid tax charges, which the scheme paid on your behalf.
Where can I find more help and information?
Unfortunately, as your pension administrators, we are not regulated to offer tax advice, which means we cannot discuss your individual tax and rollback position with you.
However, we will be hosting a series of awareness sessions designed to help you understand your Remedy Pensions Savings Statement and help guide you through the process.
If you do need advice on your personal tax situation, you should speak to a professional adviser.
Please note
If you have exceeded the Annual Allowance in 2023/24 a separate Pension Savings Statement will be issued to you.
