On the go: The government intends to delay the deadline for the issuance of pension savings statements covering the 2022-23 period by a year to October 2024 in certain public sector schemes, as part of the tax remedy to an age discrimination case.
The regulations have been drawn up with respect to the tax treatment of the remedy conceived as part of the Public Service Pensions and Judicial Offices Act 2022.
The act received royal assent in March, allowing individual government departments to make their own legislation with the aim of removing age discriminatory aspects of public service schemes.
When new public service schemes were introduced in 2015, older members were allowed to continue building pensions in the legacy schemes, while younger individuals were transferred into the new schemes. This was subsequently ruled as unlawful age discrimination.
The remedy makes retrospective changes for members’ pensionable service from April 1 2015 to March 31 2022, and will have an impact on the tax treatment of this pensionable service.
HM Revenue & Customs published a consultation on the tax treatment of these changes on November 25, seeking views from scheme administrators until January 6 2023. The legislation is intended to come into force from April 6 2023, although some components will have a retrospective effect.
The document detailed that the normal deadline for pension savings statements of October 6 2023 will be delayed by a year.
The remedy itself involves a change called “rollback”, which is intended to rectify discrimination for members of “chapter 1 new schemes” – which are public service schemes that were created by 2015 public service pension reforms, excluding the judicial or local government schemes.
“The rollback will change the opening value for the pension input amount of the affected arrangement for the members, and it might take place shortly before the 2022-23 pension savings statements would have been due,” HMRC said.
Members of these schemes will choose whether their benefits with regards to their remediable service are “legacy benefits”, which are paid by the legacy scheme under its rules, or “new scheme” benefits, which would also be paid by the legacy scheme but under the rules of the chapter 1 new scheme.
Administrators of chapter 1 legacy schemes and chapter 1 new schemes will therefore have until October 6 2024 to issue the 2022-23 pension savings statements for members who have part of their pensionable service rolled back into their legacy schemes.
Pension saving statements are issued to members when they exceed the annual allowance or the money purchase annual allowance. These have been of particular importance for members of the NHS Pension Scheme, as GPs and consultants have left the service due to annual allowance breaches.
Judges, meanwhile, will be offered an “options exercise” of having their remediable service pensioned under the 2015 scheme or the “chapter 2 legacy scheme” – which is a judicial scheme that existed before the 2015 public service reforms.
If they opt for the legacy scheme, the pensionable service for the remedy period will be treated as having always been pensioned under their chapter 2 legacy scheme, and not the 2015 scheme. The reverse is the case if they choose the 2015 scheme.
