Increasing Your Pension Benefits Oct 2018

9 Glossary Annual Allowance The annual allowance is the amount your pension savings can increase by in any one year without paying extra tax. For the 2018/19 tax year, the standard annual allowance is £40,000. However, if you are a high earner your annual allowance could be lower than £40,000 due to ‘tapering’. Please refer to our factsheet at; http://www.sypensions.org.uk/Publications/Factsheets If you have applied for lifetime allowance enhanced protection, fixed protection or fixed protection 2014 or fixed protection 2016 from HM Revenue and Customs you will lose that protection if you pay contributions into a money purchase pension arrangement (e.g. pay LGPS in-house AVCs or pay into a stakeholder or personal pension plan). You may not lose this protection if you are paying AVCs at 5 April 2006 purely for extra life cover and the terms of the policy have not varied significantly since then. You would only be subject to an annual allowance tax charge if the value of your pension savings for a tax year increases by more than the annual allowance. However, a three year carry forward rule normally allows you to carry forward unused annual allowance from the last three tax years. This means that even if the value of your pension savings increase by more than the annual allowance in a year you may not be liable to the annual allowance tax charge. Civil Partner Most people will not be affected by the annual allowance tax charge because the value of their pension saving will not increase in a tax year by more than the annual allowance or, if it does, they are likely to have unused allowance from previous tax years that can be carried forward. Eligible Cohabiting Partner Lifetime Allowance The lifetime allowance is the total capital value of all your pension arrangements which you can build up without paying extra tax. If the value of your benefits when you draw them (not including any state retirement pension, state pension credit or any spouse’s, civil partner’s, eligible cohabiting partner’s or dependant’s pension you may be entitled to) exceeds your lifetime allowance a tax charge will be made against the excess. The lifetime allowance for 2018/19 is £1.03 million (unless you have a protected higher lifetime allowance - please refer to our factsheet at www.sypensions.org.uk/factsheet 16 Primary lifetime allowance protection and enhanced protection SouthYorkshirePensionsAuthority A civil partnership is a relationship between two people of the same sex (“civil partners”) which is formed when they register as civil partners of each other. An eligible cohabiting partner is a person who is entitled to receive pension benefits upon their death. Upon the members death the eligible cohabiting partner will be required to produce a statutory declaration from a solicitor to verify the conditions laid down by the LGPS have been met before payment can be made. SouthYorkshirePensionsAuthority 17

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