RPSM06300030 - Scheme Administrator pages: Annual allowance: Employer contributions to fund previously unfunded promise of benefits

Unfunded promises of benefits

This guidance explains the annual allowance rules up to 5 April 2011. If you want to know how the annual allowance works after that date see the guidance at http://www.hmrc.gov.uk/pensionschemes/annual-allowance/index.htm.

You may receive a contribution from an employer relating to the discharge of unfunded promise of benefits. Employers have three months i.e. to 7 July 2006 to fund an unfunded promise (relating to period before 6 April 2006 without the amount being tested against the annual allowance for 2006 -2007.

It shall be borne in mind that the first pension input will not end (if no nomination is made) until the anniversary of the start date. So, a period starting on 6 April 2006 will end on the 6 April 2007 and relate to the tax year 2007 - 2008. To ensure the provision for funding on unfunded promise is considered by reference to the tax year 2006 - 2007 you may wish to make a nomination to end the pension input period within 2006 - 2007