Am I likely to be affected by the Annual Allowance?

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Most people will not be affected by the AA tax charge because the value of their pension saving will not increase in a year by more than £40,000, or, if it does, they are likely to have unused allowance from previous years that can be carried forward

You are most likely to be affected if:
  • you have a lot of scheme membership and you receive a significant pay increase, and/or;
  • you pay a high level of additional contributions, and/or;
  • you are a higher earner, and/or;
  • you transfer pension rights into the LGPS from a previous public sector pension scheme* under the preferential club transfer rules and your salary (full time equivalent) upon joining the LGPS is somewhat higher than the salary you earned when you left the previous scheme, and/or;
  • you combine a previous LGPS pension benefit that was built up in the final salary section of the LGPS with your current pension account and your salary (full time equivalent) has increased significantly since leaving and re-joining the scheme, and/or;
  • you have accessed flexible benefits on or after 6 April 2015
Merseyside Pension Fund will write to you if your LGPS pension savings exceed the AA limit in any year by no later than 6 October of the following year.
*A public service pension scheme includes a pension scheme covering civil servants, the judiciary, the armed forces, any scheme in England, Wales or Scotland covering local government workers, or teachers, or health service workers, or fire and rescue workers or members of the police forces; or membership of a new public body pension scheme.