April 04, 2022

Pension scheme administration – tax changes


Normal minimum pension age

The Finance Act 2022 will increase normal minimum pension age (“NMPA”) from 55 to 57 from 6 April 2028. NMPA is the earliest age at which a member can usually take their benefits from a registered pension scheme without incurring a tax penalty.

A member will retain a “protected pension age” of less than 57 where:

  • immediately before 4 November 2021 they had an actual or prospective right under the scheme to take their benefits from an age of less than 57;
  • the scheme rules on 11 February 2021 conferred such a right on some or all of the then members; and
  • the member either had such a right under the scheme on 11 February 2021 or would have had such a right had they been a member on 11 February 2021.

Members who transfer into the scheme on or after 4 November 2021 may also have a protected pension age – whether they do so will depend on the circumstances in each case. The changes do not affect members who already have a protected pension age of less than 55.

Some pension schemes will be required to notify the change in NMPA to their members under the disclosure legislation. Whether they are required to do so will depend on the wording of the scheme rules and trustees should take advice from their usual Mayer Brown contact to determine whether notification is required.

Even if a scheme is not required to notify members of the change in NMPA, they may wish to do so as a matter of good practice.

Annual allowance – provision of information

From 6 April 2022, employers and trustees will be subject to new requirements on the provision of information in relation to the annual allowance. In particular

  • Employers will be required to update information provided in the previous six tax years to schemes for the purposes of calculating a member’s pension input amount ("PIA") where they subsequently discover that the information provided was insufficient to enable the scheme to correctly calculate the PIA.
  • Where a member’s PIA in any of the previous six tax years has changed as a result of either the provision of additional information by the employer or a change in the scheme rules and the member has exceeded the annual allowance for that tax year (whether under the original or updated calculation of the PIA, schemes must send the member a new or updated (as applicable) pension savings statement.

For more information on the increase in NMPA or the new provision of information requirements, please speak to your usual Mayer Brown contact.

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