Changes to pension taxation
In line with our commitment to keeping you informed about pension changes, this update is to remind you that on 1 April 2016, changes to pension taxation came into force which further restrict the taxation relief on pension contributions and savings.
The pension taxation changes are:
- Lifetime Allowance reduced to £1 million from April 2016
- Annual Allowance – introduction of a tapered Annual Allowance (AA) from April 2016
For every £2 of adjusted income that an individual earns above £150,000 (including the value of pension savings), their AA will be reduced by £1 until it has tapered down to £10,000 for those with an adjusted income of £210,000 or more, inclusive of pension savings. More information is available on the USS website.
These changes won’t affect the vast majority of pension scheme members, but if you have taxable earning of over £125,000 per annum, or have accrued a pension of around £40,000 per annum (for example, you have been in the USS scheme for 40 years and have a pensionable salary of £80,000), then you may be affected by the new pension taxation allowances.
Many employers, including the School have recognised that if you are affected by these new pension taxation allowances then you may consider it is no longer viable for you to participate in Universities Superannuation Scheme (or other pension arrangements) for taxation reasons. For this reason the School has introduced a remuneration policy for members affected by these taxation changes. If you feel that you are affected by these changes then please arrange an appointment with the School’s Pensions Manager (Stuart McLean) who will be able to provide you with information in respect of the policy and the options available to you.