If a member’s pension is increased because of underpin protection, the increase is excluded for annual allowance purposes. They may still have a tax charge, but it’s based on their pension excluding the underpin addition.
It is possible that a few members may have retired before 1 October 2023 under the old underpin rules, had an underpin increase and an annual allowance tax charge in the year they retired. Members who are in this group may have paid too much tax, or asked NILGOSC to pay too much tax on their behalf. HMRC has processes in place to deal with these overpayments and NILGOSC will contact the members this applies to.
In addition, a few members may have taken their pension before 1 October 2023 and paid a lifetime allowance tax charge and are now due an increase to their pension because of the new underpin rules from 1 October 2023. They will not pay another lifetime allowance tax charge because of this increase. In addition, lifetime allowance was abolished from 6 April 2024.