What will the impact be?
It is generally impossible to say with any precision. The figures you receive for the 2022/23 tax year will reflect the new approach, which will result in a lower Pension Input Amount than would otherwise have been the case.
We have been advised of one member who has received Pension Input figures for 2022/23. Initially these were incorrectly calculated, without taking into account the delay to dynamisation/revaluation. On receipt of the corrected figures, it was immediately clear that a much lower Pension Input Amount applies and that a five-figure Annual Allowance tax charge has been avoided.
Please note this is one individual – everyone’s circumstances are different; and your Pension Input Amounts (and subsequent Annual Allowance position) will be a factor of your earnings and NHS service.
The McCloud remedy
Will the ongoing McCloud Remedy affect my Annual Allowance position for 2022/23?
Unfortunately, the extensive work that is necessary to implement the McCloud remedy means that Pension Savings Statements will not be published as usual for many people.
If you are either:
• Not eligible for McCloud remedy because you joined the pension scheme after March 2012, or
• A member who was fully protected, and didn’t see your pension scheme change between April 2015 and March 2022
Then you can expect to receive a Pension Savings Statement as usual.
Everyone else (incorporating the group of members who were members of the pension scheme before April 2012 and who did see their pension scheme change between April 2015 and March 2022) will not receive a Pension Savings Statement for 2022/23 until October 2024.
This group will see their NHS pension, as built up between April 2015 and March 2022, converted back to being part of the older NHS Pension Schemes.
This conversion means that the Annual Allowance tax calculation will change for this group for each tax year between April 2015 and March 2022. Pension schemes will provide updated information for each of these tax years, and HMRC will make a bespoke online tool available which will allow this updated information to be submitted, and your tax position to be remedied. Further guidance on this will be made available in 2024.