The government has launched a consultation on draft regulations that would change how pension input is calculated in a legacy public service pension scheme against the annual allowance (AA).

The draft statutory instrument contains provisions for pensionable service in specified legacy (closed) and service in a reformed (open) public service pension scheme to be combined for the purposes of calculating an individual’s pension input amount against their AA.

This aims to allow the offset of pension input in a legacy scheme against input in a reformed scheme where they relate to the same employment.

The changes, which come into force from 6 April 2024, are expected to be of interest to scheme administrators of public service pension schemes and individuals who are in both a legacy and reformed public service pension scheme.

The Chancellor first announced the changes as part of his 2023 Spring Budget, alongside plans to abolish the lifetime annual allowance, and increase the money purchase annual allowance and tapered annual allowance.

The changes aim to improve workforce retention by allowing members to offset any negative real growth for AA purposes in legacy public service pension schemes against the AA, after concerns around the impact of negative growth were previously raised in relation to the NHS pension scheme.

The consultation closes on 26 February 2024.

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