In April 2022, we identified a very specific and technical issue linked to the Annual Allowance, the tax on pension growth measured each tax year, and the results of the complex calculations linked to this issue. A newsletter explaining the problem was published in August 2022.
At the time, we alerted the Government to this issue and lobbied for change. The Government agreed to make changes to eradicate the issue for the NHS Pension Scheme for the tax year 2022-23 and future tax years. Crucially, it did not lead to any reduction in pension benefits.
While we know that this is a significant positive outcome, until now we could not place a value on what the change meant. In recent weeks, one of our members has been presented with figures that show their position for the tax year 2022-23 prior to this change being adopted.
According to our member, thanks to our intervention the pension administrators were reminded of the new regulations concerning annual allowance charges for the year 2022-23. As initially presented, they were facing a tax charge of £25,000 to HMRC based on the erroneous calculation by the pension administrators. After our communication, the pensions administrators applied the correct rules, which resulted in no tax charge for the year. There was no reduction in their final pension award.
“I cannot thank the BDA Pensions advice team enough for all their help and support during the difficult process of retiring from the NHS.” our member said.
“Retiring should be a straightforward process and a period of happiness. However, this can be an extremely stressful time as the amount owed to HMRC at the point of retirement is entirely unknown until the final date of the award.
"If I had accepted the pension administrators’ initial figures, I would have lost £25,000 to HMRC and I am not convinced I could ever have been able to recover it. I am so grateful to have this support as a member of the BDA. I would encourage all dentists who are not members to join to get access this service. In my opinion it has been more than worth the membership fee.”
“Pensions tax figures are highly individual – each person’s Pension Growth is determined by their earnings and service. But what is certain is that a similar proportionate degree of reduction in pension growth is likely to be seen by many members of the NHS Pension Scheme, resulting in lower Annual Allowance charges for all. This is one area in which the BDA has identified a problem, lobbied Government, worked with wider stakeholders and achieved a very significant, positive outcome for dentists.” Head of Pensions, Phil McEvoy said.
We will continue to represent the interests of dentists and their pension savings.