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Document What is meant by recycling lump sums?

The Finance Act 2006 prevents an individual investing a tax-free lump sum back into a registered pension scheme automatically generating further tax relief on the amount reinvested. This is known as recycling lump sums.

If recycling of lump sums does occur your Pension Commencement Lump Sum (PCLS) will be treated as an unauthorised payment. This means you will be liable to a tax charge of up to 55%. If you recycle your pension commencement lump sum then you must notify NHS Pensions in writing.

For further information please see our NHS Pensions website.
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