The annual pensions statements for 2020/21 are now available from the NHS Pensions Agency. If you have not already received yours, you should request it now. This document provides important information to help determine your true pension position and whether you are likely to pay tax charges on your pension savings.
The ‘annual allowance’ limits the amount of tax-free pension savings which can be accrued per year to £40,000. The Pensions Agency issues statements detailing doctors’ annual contributions for the preceding tax year in Autumn every year. However, the only happens if the ‘deemed growth’ in their pension is more than £40,000.
There is also the ‘tapered’ annual allowance to consider, but those breaching this limit may not receive a statement at all as the NHS Pensions Agency is not duty bound to do so.
The ‘tapered’ annual allowance applies to pension savers with a ‘threshold income’ of over £200,000 and reduces the limit on a sliding scale. This can be as low as £4,000 for high earners. Your threshold income includes earnings from your NHS salary, private practice or academic work, investment income and buy-to-let incomes.
Please contact the Agency to request your copy if you do not already have it. When it does arrive, it is a good idea to get the data checked thoroughly as we often spot small errors which can have a large impact.