Special annual allowance

From 22 April 2009 a special annual allowance charge has been introduced for 2009/2010 and 2010/2011. Most scheme members will not be affected by this.

 The special annual allowance charge will apply only if:

• you increase the level of your pension savings on or after 22 April 2009 beyond your normal, ongoing regular savings; and
• the value of your pension savings during the year is greater than £20,000; and
• in the year you increase the level of your pension savings, or one of the previous two tax  years, you have an annual income of £150,000 or more.

The Government has announced that the level of annual income at which the special annual allowance applies is to be £130,000 or more from 9 December 2009.   

If the special annual allowance charge applies, then the value of the additional pension savings will be subject to a special annual allowance tax charge to recover tax relief given at above basic rate. Basic rate in 2009/2010 is 20%. 

The assessment covers any pension benefits you may have in all tax-registered pension arrangements – not just the LGPS.