The annual allowance, which has had a particularly negative impact on the NHS workforce in recent years, will be increased from £40,000 to £60,000 from April 2023.
The tapered version of the allowance which further penalises higher earners depending on income, will see its minimum amount set to £10,000 from the current £4,000. The figure was originally £10,000 until it was reduced in April 2020.
The level of income at which the tapered annual allowance applies will rise in April too. The ‘adjusted income threshold’ will increase from £240,000 to £260,000. Adjusted income includes your NHS pensions growth and any personal pensions, on top of your work earnings, investment dividends and buy to let income, for example.
In further news, it was confirmed that public sector pension schemes will now be considered ‘linked’ for the purposes of calculating the annual allowance. This means that negative pension growth in one scheme can be offset against positive growth in another.
Despite the positive news for doctors’ pensions savings in the Budget, there is no doubt that navigating the complex issues is just as challenging as ever – particularly as we still await full clarification on the McCloud remedy in 2023.
Approver Quilter Financial Services Limited & Quilter Mortgage Planning Limited. 18/04/2023