Pension input amounts and annual allowance for NHS staff

A pension input amount is the growth in the value of your NHS pension over one tax year. It is the number HMRC compares with your annual allowance, and NHS Pensions sends a pension savings statement only when that growth is above the standard allowance. For most NHS staff the statement never arrives, because the growth is below the limit.

What the number means

The annual allowance is, in NHS Pensions’ words, “the maximum amount of tax free growth an individual’s pension can grow by in one year”. GOV.UK gives the standard allowance as £60,000 for the current tax year. It covers any increase in a defined benefit scheme in a tax year, and it applies across all your private pensions, not scheme by scheme. NHS Pensions lists £60,000 for 2023/24 and 2024/25 too.

Your pension contributions are not part of the figure. The pension input amount is about how much the promised pension has grown, so a pay rise, a promotion or a jump up a band can push it higher in the same year. The annual allowance guide covers who is likely to be affected.

How the amount is worked out for the 1995 and 2008 Sections

NHS Pensions’ statement guide explains the steps. The guide dates from 2019, and its worked figures and tapering thresholds are out of date, but the method it describes is the one on your statement.

1. NHS Pensions takes your pension as it stood the day before the tax year began and multiplies it by 16.
2. For 1995 Section members, it adds the automatic retirement lump sum.
3. It adjusts the total for inflation, using the 12-month rise in CPI to the September before the tax year started. This gives the opening value.
4. It repeats the first two steps using your pension at the end of the tax year. This is the closing value.
5. It subtracts the opening value from the closing value.

The answer is your pension input amount. If the closing value is lower than the inflated opening value, because inflation outran your pension growth or your pensionable pay fell, the statement shows £0.00 rather than a negative figure.

How the 2015 Scheme figure is calculated is set out in separate NHS Pensions factsheets that were not part of the material used here, so look there for the 2015 method.

What the statement shows

Each NHS scheme has its own Pension Scheme Tax Reference, and you need it if you must fill in a Self Assessment return. The statement gives the pension input amount for the relevant year and for the previous three years, with the allowance for each. If you belong to both the 1995/2008 and 2015 schemes, you should get two statements, and you add the two amounts together. You also add pension savings outside the NHS, such as a personal pension, which are not on the NHS statement.

When it arrives

If your employer sends NHS Pensions the membership information by 6 July, NHS Pensions writes to you by 6 October. If the information arrives later, you should receive it within three months of receipt. NHS Pensions says it is still working through some 2024/25 statements and had no confirmed date for finishing them. If you need yours for a tax return, the delay is a practical problem to raise with NHS Pensions directly.

Comparing it with your allowance

If the pension input amount is within your allowance, there is nothing to report to HMRC. If it is over, unused allowance from the previous three tax years can be added, and checking that is your responsibility. NHS Pensions says carry forward might remove the charge altogether.

If a charge remains, it is not a fixed rate. It depends on your taxable income and how far you are over, and you report it through Self Assessment. The Self Assessment guide for employees and the 60 per cent tax trap guide explain related tax issues for higher earners.

A higher earner’s allowance may be lower than the standard one. The NHS Pensions page gives the taper thresholds as £200,000 threshold income and £260,000 adjusted income from 6 April 2023, and GOV.UK repeats the same figures.

Scheme Pays

Where growth is above the standard allowance, the NHS Pension Scheme can pay the charge to HMRC on your behalf. NHS Pensions calls this mandatory Scheme Pays. The election form is SPE2, due by 31 July in the year after the tax year. Voluntary Scheme Pays extends this to members whose growth is over a tapered allowance. NHS Pensions advises making any election before you retire, because a post-retirement election is considered only under the voluntary route and reduces your benefits.

None of this tells you what to do about your own tax. A tax adviser or HMRC can do that, and NHS Pensions can explain your statement. The NHS Pension Scheme guide has the wider picture.