A reduction has been announced to Annual Allowance (AA), which is the amount of growth in pensions savings permitted in a given tax year. The AA was originally reduced to £50,000 in the 2011/12 tax year and will reduce again from the 6th of April 2014 to £40,000.
Teachers’ Pensions will issue Pensions Savings Statements for the 2013/14 tax year by the 6th of October 2014, although the limit for this tax year remains £50,000. Pensions Savings Statements on the new £40,000 limit will be based on growth in the Teachers’ Pensions Scheme (TPS) between the 1st of April 2014 and the 31st of March 2015. These statements will be issued by the 6th of October 2015.
Members should be aware of the impact of the reduction on their benefits in the TPS if they receive moderate/large increases in salary or if they are considering purchasing additional pension by lump sum.