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HMRC internal manual

Pensions Tax Manual

Annual allowance: pension input periods: hybrid arrangements

Glossary PTM000001
   

 

Section 238 Finance Act 2004

Paragraph 27(2) Schedule 17 Finance Act 2011

A pension input period is the period over which the amount of pension saving (pension input amount) under an arrangement is measured. The measurement works on the principle of how much was saved from the start of the pension input period to the end of the pension input period.

If the only options under the hybrid arrangement are defined benefits or cash balance the rules for pension input periods for defined benefits and cash balance arrangements apply (see PTM052300 for more details).

If one of the options under the hybrid arrangement is money purchase benefits that are not cash balance benefits (other money purchase) then the pension input period starts from the earlier of:

  • the date of payment of the first contribution
  • the date the individual starts to build up pension rights.

PTM052200 has more details about the date of the first contribution.

That first pension input period will end on the following 5 April unless an earlier or later end date is nominated. This nominated end date must be within 12 months of the starting date. A nomination for an end date later than 5 April can be made after 5 April but this cannot be a date before the nomination is made.

Note, if the first pension input period actually starts on a 5 April it will end on that same 5 April (and not the following 5 April) unless a later end date is nominated. Such a nominated end date must be within 12 months of that 5 April. A nomination for a later end date can be made on or after that 5 April but this cannot be a date before the nomination is made.

The next (second) pension input period starts the day following the end of the first pension input period. It will end on the anniversary of the date on which the first pension input period ended, unless another end date for the second pension input period is nominated instead. This nominated end date can be any date but the chosen date:

  • cannot be a date before the date the nomination is made, and
  • must be in the tax year that follows the tax year in which the previous (first) pension input period ended. You cannot have two pension input periods relating to the same arrangement ending in the same tax year.

Only the pension scheme administrator can nominate an end date for a hybrid arrangement.