Decision details

The Committee was informed that where a member of the LGPS had breached their Annual Allowance (the amount of pension savings they could make without having to pay additional tax) it was possible, in prescribed circumstances, for them to request the Fund to pay that tax charge in return for having a reduction applied to their pension once that came into payment, in a process known as 'scheme pays'.

Details of the availability of  Voluntary Scheme Pays, which effectively gave the Fund the discretion to extend the current criteria under which members can ask the Fund to pay a tax charge where the annual allowance was breached, were set out in the report. It was noted that the number of members who would be affected by the extension to the criteria was not considered to be significant and would not represent an administrative burden on the Fund.

Resolved: That the use of Voluntary Scheme Pays in relation to the Lancashire County Pension Fund is approved in the following circumstances:

1.  Where a member's pension savings are subject to the tapered annual allowance and the tax breach relates only to Lancashire County Pension Fund benefits rather than as a result of growth in multiple pension schemes.

2.  Where a member, as a result of administrative difficulties beyond their control, misses the ‘mandatory scheme pays’ deadline (e.g. where the member was not provided with the necessary information on time).

3.  Any other cases which are not covered under the mandatory requirements for 'scheme pays' or covered under the 'voluntary scheme pays' criteria identified in (1) and (2) above where it can be demonstrated that exceptional circumstances apply, approval is delegated to the Head of Fund