Old Mutual Wealth has added a voluntary ‘scheme pays’ feature to its personal pension allowing customers to settle annual allowance charges for any scheme.
Quilter’s adviser platform has introduced the new feature following issues surrounding the tapered annual allowance which have affected many public service workers, including senior doctors.
The current rules mean that anyone earning in excess of £150,000 will see the amount they can save into a pension each year reduced. However, rather than build up large debts, Quilter said clients can now use their personal pensions to pay their annual allowance tax charge where they have exceeded the limit.
The scheme, developed in collaboration with Quilter’s national advice business, is available to all advisers’ clients who simply fill in one form to select this option for paying the tax charge.
Once in place, the Collective Retirement Account will pay HM Revenue & Customs as soon as possible after a request is received, minimising the risk of any late payment penalties, according to Quilter.
Ian Browne, pensions expert, Quilter, said: “The issue of annual allowance breaches has truly reached the mainstream given all the problems facing doctors, judges, members of the armed forces and other public sector employees.
“As such providers need to come to the fore with innovative solutions that makes it easier to pay for a tax charge many are unaware they have triggered.”
Browne said the new feature will “remove the stress” of paying annual allowance tax charges, as well as help reduce the risk of facing extra charges.
He added: “This is a simple and easy to use service, which only requires the information you already need for a self-assessment. As a result we think this will give clients and their advisers a wide range of options when it comes to giving pension advice and planning.”
Graham Crossley, head of development, Charles Derby Dental and Medical, commented: “As an organisation we have seen a large increase in the demand for tax planning in the wake of the issues facing doctors in the NHS pension scheme, and we believe that this solution should go a long way to alleviating some of the complexity involved in paying annual allowance tax charges.”
