Surprise deferred pension input amount

BillyBigSteps

Hi All
I've been paying additional voluntary contributions into a company DC scheme close to the annual allowance for the last 6 years. All was good until recently when I was informed by a deferred DB pension scheme, that due to an increase in my benefits they had applied a pension input amount of over £95K for financial year 24-25. Even rolling over unused allowance from previous years this has taken me well over the annual allowance,
The tax bill will be well above £20K which seems unfair given these are a temporary increase and could reduce on future revaluations. I can see how they have arrived at the £95K number as HMRC rules use a 16x multiplier which for a potential temporary increase in benefits is a blunt tool.
I was also given no warning of the pension input so missed the chance to reduce my voluntary contributions, what options do I have to challenge the input amount (given I have seen no benefit as I'm deferred), or the HMRC multiplier (given my increase could be temporary). 

Marcon

BillyBigSteps said:

Hi All
I've been paying additional voluntary contributions into a company DC scheme close to the annual allowance for the last 6 years. All was good until recently when I was informed by a deferred DB pension scheme, that due to an increase in my benefits they had applied a pension input amount of over £95K for financial year 24-25. Even rolling over unused allowance from previous years this has taken me well over the annual allowance,
The tax bill will be well above £20K which seems unfair given these are a temporary increase and could reduce on future revaluations. I can see how they have arrived at the £95K number as HMRC rules use a 16x multiplier which for a potential temporary increase in benefits is a blunt tool.
I was also given no warning of the pension input so missed the chance to reduce my voluntary contributions, what options do I have to challenge the input amount (given I have seen no benefit as I'm deferred), or the HMRC multiplier (given my increase could be temporary). 

Are you sure you aren't covered by the carve out for deferred members: https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm053910

hyubh

BillyBigSteps said:

Hi All
I've been paying additional voluntary contributions into a company DC scheme close to the annual allowance for the last 6 years. All was good until recently when I was informed by a deferred DB pension scheme, that due to an increase in my benefits they had applied a pension input amount of over £95K for financial year 24-25. Even rolling over unused allowance from previous years this has taken me well over the annual allowance,
The tax bill will be well above £20K which seems unfair given these are a temporary increase and could reduce on future revaluations. I can see how they have arrived at the £95K number as HMRC rules use a 16x multiplier which for a potential temporary increase in benefits is a blunt tool.
I was also given no warning of the pension input so missed the chance to reduce my voluntary contributions, what options do I have to challenge the input amount (given I have seen no benefit as I'm deferred), or the HMRC multiplier (given my increase could be temporary).

A real terms increase in the accrued pension for a fully active DB member of £6,000 pa would be extremely unusual. How have you managed this for a 'deferred' pension...?

BillyBigSteps

hyubh said:

BillyBigSteps said:

Hi All
I've been paying additional voluntary contributions into a company DC scheme close to the annual allowance for the last 6 years. All was good until recently when I was informed by a deferred DB pension scheme, that due to an increase in my benefits they had applied a pension input amount of over £95K for financial year 24-25. Even rolling over unused allowance from previous years this has taken me well over the annual allowance,
The tax bill will be well above £20K which seems unfair given these are a temporary increase and could reduce on future revaluations. I can see how they have arrived at the £95K number as HMRC rules use a 16x multiplier which for a potential temporary increase in benefits is a blunt tool.
I was also given no warning of the pension input so missed the chance to reduce my voluntary contributions, what options do I have to challenge the input amount (given I have seen no benefit as I'm deferred), or the HMRC multiplier (given my increase could be temporary).

A real terms increase in the accrued pension for a fully active DB member of £6,000 pa would be extremely unusual. How have you managed this for a 'deferred' pension...?

One bonus due to the 2023 valuation showing a surplus, and a second bonus due to the transfer of an investment reserve.