Pension savings statements (PSS)

October, not only halfway through the fiscal year, but also the time clients may receive pension savings statements (PSS). 

1. Why is the PSS sent?

A PSS is sent for the previous tax year for one of these two reasons;

• pension input amounts to the scheme exceed the standard Annual Allowance (AA) 
• the scheme administrator believes the individual has flexibly accessed benefits and money purchase input amounts to the scheme exceed the Money Purchase Annual Allowance (MPAA) 

But just because this is sent doesn’t mean that there will automatically be a tax charge.

2. What action to take?

Knowing the clients carry forward situation is essential (although you can’t use carry forward for MPAA excesses). A PSS details the last three years input history for the scheme (but the client may be a member of other schemes). Carrying out the correct calculations is essential, carry forward doesn’t have to be claimed but evidence should be retained should HMRC ever require proof.

Its important to remember that just because a scheme hasn't issued a pension savings statement doesn't mean a client hasn't exceeded their AA. A client who has been tapered could have exceeded their tapered AA without breaching the £60,000 point at which a scheme will issue a pension savings statement. 

3. Who pays the tax charges that may arise?

Ultimately, it’s the client. How it’s paid can be based on several factors. Does the client meet the mandatory scheme pays conditions? Is voluntary scheme pays available? If the scheme does not pay the charge the client will have to pay from their own resources. Whatever the option, this must be declared in a tax return to HMRC.