Question to the Department of Health and Social Care:

To ask the Secretary of State for Health and Social Care, pursuant to the Answer of 8 April 2019 to Question 240581 on NHS: Pensions, what level of interest is applied to annual allowance charges paid through the scheme pays facility of the NHS Pension.

The ‘Scheme Pays’ facility allows NHS Pension Scheme members to settle their annual allowance tax charges without needing to find funds upfront. However, HM Revenue and Customs requires that if a defined benefit pension scheme pays an annual allowance charge there must be an adjustment to the benefits the member has accrued. The value of the scheme pays charge, plus interest, is recouped from the value of the member’s pension on retirement. The interest rate for scheme pays charges is set at the scheme discount rate. The discount rate for public service pension schemes is currently consumer price index plus 2.4%, which represents the notional rate of investment return on contribution income.