As mentioned in our previous edition of Pensions Pieces, in the July 2015 budget the Chancellor announced the introduction, from April 2016, of a tapered annual allowance for individuals earning over £150,000. There will also be anti-avoidance provisions designed to prevent individuals from avoiding the taper by forgoing salary in return for higher employer pension contributions (e.g. under salary sacrifice arrangements). These anti-avoidance provisions are designed to ensure that those contributions will be taken into account for the purposes of determining ‘Threshold Income’ and so whether or not the taper applies.

There are certain conditions which have to be present for these anti-avoidance provisions to apply, one of which is that the salary sacrifice arrangement is ‘made on or after 9 July 2015’ although it is not clear what exactly would be covered by this. In the meantime, and in any event, employers who have salary sacrifice arrangements in place in relation to ‘high earners’ should be aware of these provisions.