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Document What is Scheme Pays?

If you have an annual allowance charge you may be able to ask NHS Pensions to pay some or all of that charge in return for an appropriate reduction to your NHS benefits. This is called scheme pays.

NHS Pensions offers two types of scheme pays facility; mandatory scheme pays and voluntary scheme pays.

In order to meet the criteria to be accepted for mandatory scheme pays the pension input amount in either the 1995/2008 Scheme or the 2015 Scheme must be more than the standard annual allowance and your annual allowance charge for the year has to be over £2,000.

If you do not meet the criteria to be accepted for mandatory scheme pays you may be accepted for voluntary scheme pays if you have membership in more than one scheme and the input amount in one or both NHS Pension Schemes doesn’t exceed the standard annual allowance but the combined pension input amount when added together exceeds the standard annual allowance.

The voluntary scheme pays facility was also extended from the 2017/18 tax year to include members who had not exceeded the standard annual allowance but had exceeded their own tapered or alternative annual allowance through the growth in their NHS Pension in either one scheme or across both. In addition, from 2017/18 it is no longer a requirement that your annual allowance charge needs to exceed £2,000 to apply for Scheme pays.

If we are paying all or part of your Annual Allowance charge through voluntary scheme pays you will remain liable for any late payment interest HMRC may charge if the annual allowance charge is paid after the self-assessment tax return deadline of 31 January.

For both mandatory and voluntary scheme pays you can only ask NHS Pensions to pay for an annual allowance charge that was incurred due to growth in the NHS Pension Scheme. If you have pension savings outside of the NHS that proportion of the charge cannot be paid through scheme pays.

If you are accepted for scheme pays you will be notified whether the charge is to be paid using our mandatory or voluntary scheme pays facility, or both.

If you make a scheme pays election this is an irrevocable decision. Therefore we would recommend that you read through the various scheme pays factsheets on our website when making your decision.

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