THIS PRACTICE NOTE APPLIES ONLY TO PENSION SCHEMES IN ENGLAND AND WALES

scheme pays, introduced by Schedule 17 to the Finance Act 2011 (FA 2011) allows a member to require their pension scheme to pay their annual allowance charge in certain circumstances. The scheme can then recoup this cost by reducing the member's pension benefits accordingly.

Given that a member's standard annual allowance has reduced over time (at its highest it was £255,000 and since 6 April 2023, it is £60,000), more members are likely to incur an annual allowance charge and therefore more pension schemes are likely to have to make use of Scheme Pays.

Importantly, one of the conditions to be satisfied for a member to require their scheme to use Scheme Pays is that the total amount of pension savings in the scheme for the same tax year (ie the pension input amount) must exceed the standard annual allowance (ie £60,000 from 6 April 2023 and £40,000 between 6 April 2014 and 5 April 2023). This means that the