As the deadline for issuing pensions saving statements approaches please action any SM8’s received.
If the contributions and pay are not amended in line with a reduction in hours/sessions worked, the member may receive an incorrect Annual Allowance Statement, which could result in an incorrect tax charge or incorrect benefits on retirement.
When a member works part time in either an hourly or sessional contract and the annual update or termination details show actual part time hours or sessions worked that are in excess of whole time for the period, the annual hour/session figure is reduced to the maximum amount of hours/sessions that can be worked for the period.
Form SM8 is sent advising of the maximum allowable hours or sessions for the period and will request to either:
- agree the figure and amend your records
- advise a correct figure which must be below the figure advised
Example:
The annual update for year ending 2019 shows a member worked a total of 1399 hours for the period 1 December 2018 to 31 March 2019 (121 days). The member’s standard hours for this employment are 37.5; this means the maximum number of hours that can be worked during this period is 648 hours.
This is calculated as: 121 ÷ 7 x 37.5 = 648 hours
If the member has worked any hours that were paid at a higher overtime rate, then these are not pensionable and the hours should be amended, if relevant.
The employees and employers contributions and pay figures need to be reduced to exclude contributions / pay taken on the non-pensionable hours using the SD55E form and any monies refunded to the member locally.