Changes to lifetime allowance charges following the public service pensions remedy
If you have a private pension, following the public service pensions remedy (known as McCloud), you may have to tell your pension provider of changes, or have new charges to pay.
If you’re a member of a public service pension scheme and have had a benefit crystallisation event within the scheme, you may have a change to the amount of lifetime allowance used up by that event, as a result of the public service pensions remedy.
Your public service pension scheme will work out any changes and send you an updated benefit crystallisation event statement if you’re affected. You must share this statement with any other pension scheme providers you have under which you have had a benefit crystallisation event, as the scheme may also be affected.
If you’re not sure if you’re affected by the public service pensions remedy, you can check if the remedy affects you or read the full guidance on the remedy.
Who is liable for the lifetime allowance charge
Before 6 April 2023, if you exceeded your pension lifetime allowance and had a lifetime allowance charge, you and the scheme administrator are both liable to pay this charge.
Your pension scheme administrator can apply to HMRC for a ‘discharge’ of their liability under certain circumstances, meaning you will be solely liable for the charge — you cannot apply to be discharged of your liability.
If there’s an increase in the amount of the benefit crystallisation event, this may result in a new or increased lifetime allowance charge for a private sector pension. If it’s a result of the public service pensions remedy your private sector scheme administrator will be able to apply for a discharge to this liability.
If your private pension discharges their liability
If your private sector pension scheme administrator is discharged from their liability to the new or increased charge, we will issue an assessment to you for the new lifetime allowance charge.
You can either:
- pay the charge (we’ll let you know how you can do this when we contact you)
- give HMRC details of your public service pension scheme administrator — this will make them jointly liable for the charge
If you ask your public service pension scheme to pay the charge, we will collect the additional tax due from that scheme administrator. Once the public service pension scheme administrator pays the charge, they will adjust your pension benefits accordingly.