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Scheme Pays

Understand how you can use your pension to pay any Annual Allowance charges

What is Scheme Pays?

If you go over your Annual Allowance (AA), Scheme Pays allows you to use what you’ve built in your pension savings to pay the tax charge.

How it works

You would need to pay an AA charge if your pension savings in a tax year:

  • go over the standard AA (or your own Tapered AA) for that year
  • you don’t have enough unused AA from the previous three years to carry forward to cover the amount you’ve gone over by.

If you apply for Scheme Pays, we’ll take savings from your Investment Builder pot to cover the AA charge. If you haven’t built up enough in your pot, your benefits in the Retirement Income Builder will be reduced to pay the charge.

Here’s when you can use Scheme Pays

You can ask us to pay your AA charge if both:

  • your AA tax charge is over £1,000
  • and the tax charge is based on the benefits and savings you’ve built up with USS (not with another pension scheme).

You can also pay part of the charge yourself and ask us to cover the remainder.

How to apply

Got a question?

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