Dear. Annual Pension Savings Statement LOCAL GOVERNMENT PENSION SCHEME TEESSIDE PENSION FUND

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1 Dear Annual Savings Statement LOCAL GOVERNMENT PENSION SCHEME TEESSIDE PENSION FUND Please find enclosed your Savings Statement for 1 April March 2015, which shows the growth in your pension benefits in this scheme and tests them against the annual allowance. What is annual allowance? The annual allowance is the maximum amount of pension savings on which you can receive tax relief each year. The annual allowance is set by Her Majesty s Revenue and Customs (HMRC). The limit for the allowance for 2014/15 is 40,000. If the amount shown is higher than 40,000 (the annual allowance) then you may be subject to a tax charge. Why have you sent me this statement? We have sent you this statement for one of the following reasons- Our records show that the growth of your pension savings in this scheme exceeds the annual allowance; or You have requested one; or You are close to the annual allowance; or A third party has requested one on your behalf (you will need to forward this to them); or We have revised a previous statement due to a notification of amended data. Based on the information we hold, the growth in your pension savings in this scheme is for 2014/15. This is known as the pension input amount (PIA). The table towards the end of this document provides a breakdown of how this figure has been calculated and whether or not an associated tax charge may apply. Please note, that the figure shown DOES NOT include any additional pension savings that you may hold elsewhere. If you do have pension savings in other schemes, you will need to add growth from all of your savings together to determine if you have breached the annual allowance limit. Annual allowance charge Any growth in your benefits in excess of the annual allowance may be subject to tax. This tax is called the annual allowance charge. Please remember that when assessing if you have exceeded the annual allowance you must include all your pension savings (excluding your state pension), not just the benefits you hold in this scheme. Carry forward Even if your pension input amount does exceed the annual allowance you still might not have to pay an annual allowance charge. This is because you can carry forward any unused annual allowance from the previous three tax years to 2014/15; this will give you a higher amount of available annual allowance.

2 There is a strict order in which you can carry forward any unused annual allowance. You use the annual allowance in the current year first, then use any unused annual allowance from earlier years, using the earliest tax year first. We have calculated your unused annual allowance and the pension input amount subject to a tax charge based on your benefits from this scheme only. If you have any other pension savings or you wish to check our calculations a calculator is available on the HMRC websitewww.hmrc.gov.uk/tools/pension-allowance/index.htm If the pension input amount shown for the year to 31 March 2015 is greater than 40,000, after you have used your carry forward allowance, then a tax charge is potentially due. How do I tell HMRC that my benefits have exceeded the annual allowance limit? You do not need to tell HMRC if the total growth in your pension savings (PIA) for the tax year is: below 40,000; or falls below 40,000 after carrying forward any unused allowance from the three previous years. If the growth in your pension savings is above 40,000, you will need to complete a Self- Assessment tax return. If you don't normally complete your tax return online you will need to register with HMRC. When you fill in your tax return online, you will need to input the data provided on your Savings Statement. Any excess pension savings you have are added to your taxable income. You pay Income Tax on taxable income at the tax rate that applies to you - The system will work out your tax charge for you. Information on how this charge is calculated, together with worked examples, can be found atwww.hmrc.gov.uk/pensionschemes/understanding-aa.htm#4 Can I ask the scheme to pay the tax charge? If in the same tax year both of the following apply- the annual allowance charge for the year is more than 2,000; and your pension savings in this scheme are more than 40,000, you can ask the scheme to pay your annual allowance charge on your behalf. They will claim it from your pension benefits; this is called scheme pays. If you are considering this option, please let us know how much your tax charge is, we will then let you know how this will affect your future benefits in the scheme. If you want the scheme to pay your annual allowance charge for the tax-year 2014/15 your scheme pays election must reach the scheme by 31 July Once you have opted to utilise scheme pays, you cannot change your mind so think carefully before you decide.

3 IMPORTANT POINTS TO NOTE: If your pensionable pay for 2014/15, as shown in the table towards the end of this letter, is either: o lower than a pay figure received in the previous 13 years; and/or o includes pay earned in previous years e.g. a backdated pay award then please let us know immediately as we will need to recalculate your pension input amount for 2014/15; this may mean that any tax due is reduced / negated. If you expect to take all your benefits from the scheme in a tax year to which a tax liability relates, you must tell the scheme BEFORE you become entitled to those benefits. Neither the s Unit, nor your employer, are qualified or registered to give tax advice. Individuals are responsible for their personal tax liability and should seek independent taxation advice. The information provided here is based on our current understanding of HMRC rules. We take no responsibility for any decisions or actions taken as a result of the information given. If you are unsure about how you may be affected by any of the information provided, you should seek appropriate professional advice. LIFETIME ALLOWANCE All benefit calculations are tested against the standard lifetime allowance (currently 1.25m, reducing to 1m in 2016/17) for taxation purposes. Transitional protection for pension rights already above 1m is expected to be introduced to ensure the change is not retrospective. If you currently hold or obtain any form of protection against the standard lifetime allowance (such as IP14, for example), please provide us with a copy of your certificate. Similarly, if you have lost any previous protection, please let us see evidence of this. Yours sincerely Mike Hopwood s Manager

4 How are my pension savings calculated? Because this is a defined benefit scheme we have to calculate how much your benefits have increased over the previous year and the way we do this is dictated to us by the tax authorities. The calculation is as follows: {(16 x A) + lump sum)} [{(16 x B) + lump sum} x CPI] + AVCs Where: A = Closing B = Opening CPI = Consumer Prices Index AVCs = Additional Voluntary Contributions Glossary of Terms Annual allowance The maximum amount a person s pension benefits can build up annually without incurring a tax charge. This has reduced significantly from 255,000 when introduced in 2006/07 to 40,000 for the 2014/15 tax year. Annual allowance charge A tax charge levied on an individual who exceeds the annual allowance; it is charged on the amount by which the total pension input amount exceeds the amount of the annual allowance. The annual allowance is designed to recoup the full marginal rate relief the individual has received (i.e. basic, higher or additional rate relief). Carry forward Where the value of a member s pension accrual in any year exceeds the annual allowance, any unused annual allowance from the three previous tax years may be carried forward to be offset against the excess pension accrual. The annual charge will apply to any pension accrual which still exceeds the annual allowance after carry forward has occurred. Closing value (pension & automatic lump sum) is the value of your benefits at the end of the pension input period. The closing value can be subject to adjustments, for example, where benefits are transferred in or out or there is a pension credit or pension debit. Consumer price index (CPI) an indicator of price inflation used to assess the indexation of pensions. CPI replaced the retail price index (RPI) from April Excess pension savings amount is the amount by which the total pension input amount exceeds the amount of the annual allowance. Opening value (pension & automatic lump sum) is the value of your benefits at the start of the pension input period including any inflationary increase (CPI) applied. input amount is the growth in your pension and is calculated by determining the difference between the opening and closing values; if you contributed to any other registered pension scheme you will need to work out your total pension input amount before determining whether or not you have exceeded the annual allowance limit. input period (PIP) is the period over which growth in a member s pension saving is assessed; the PIP for this scheme is currently 1 April to 31 March. Scheme pays - Providing certain conditions are met, an individual can make an election requiring the pension scheme administrator to pay some or all of their annual allowance charge liability relating to that scheme out of their pension savings in that scheme. In return there will be an appropriate reduction to their pension benefits. Tax registered pension scheme is a pension scheme registered with HMRC to receive favourable tax treatment. Total pension input amount is the aggregate value of the pension amounts in respect of each arrangement relating to an individual under any registered pension scheme.

5 Savings Statement for 1 April March Local Government Scheme Name: NI No: Input Period (PIP) Annual Allowance Opening Closing Opening Lump Sum Closing Lump Sum AVCs paid Input Amount Unused Annual Allowance Adjusted Unused AA Taxable Input able Pay Scheme pays option received and applied 2014/ , , , , , , , , , , , = Y if SCH PAY FLAG ticked 2013/ , , , , , , , , , , , / , , , , , , , , , , , / , , , , , , , , , , , The figures above show that your Input Amount in the year 2014/15 was After taking account of unused allowances from the years 2011/12 to 2013/14, your Taxable Input was If your Taxable Input is greater than 0.00, you will need to inform HMRC as you need to pay tax on this amount. Please note: This statement DOES NOT include any additional pension savings that you may hold in any other pension arrangement. Input Amount is the increase in the value of your benefits. We are required to report this to HMRC if the total pension input amounts for 2014/15 in this scheme exceed 40,000. Unused Annual Allowance is the amount of annual allowance that has not been used up during the tax year i.e. the difference between the annual allowance and the pension input amount. If this figure is negative, you have exceeded the annual allowance. Adjusted Unused Annual Allowance is the amount of unused annual allowance after any carry forward amount from the previous three years has been taken. Taxable Input is the amount of pension input which is subject to a tax charge i.e. the pension input amount less any available annual allowance for the year, including all available carry forward. If this amount is 0.00 for 2014/15 you may not have a tax charge unless you have other pension savings. able Pay has been calculated using the contributions your employer has told us that you paid in the relevant year. If you worked part time and/or term time, this is the pay you would have received if you had worked full time for calculating pre April 2014 benefits. If your pay figure seems too high or too low please contact us immediately as the information that we hold may be incorrect or incomplete. IMPORTANT: If the pensionable pay for 2014/15 shown in the table above is either: lower than a pay figure received in the previous 2 years; or includes pay earned in previous years e.g. a backdated pay award, then please let us know immediately as we will need to recalculate your pension input amount for 2014/15; this may mean that any tax due is reduced / negated.

6 DISCLOSURE OF PENSION SCHEME INFORMATION Saving Statements Automatic We are required to give you a pension savings statement if the amount of your pension savings (pension input amount) in the scheme is more than the annual allowance. This must be issued by 6 October following the end of the tax year. For example, the pension savings statement for the 2015/2016 tax year must be sent by 6 October 2016 On request You can request a pension savings statement if you are not automatically entitled to receive one (i.e. your pension savings do not exceed the annual allowance). The statement must be issued within three months of your request. However, if your request is made before 6 July following the end of the tax year, we have until 6 October to provide the information requested. For example Information requested in June 2016 for the 2015/16 tax year must be provided by 6 October 2016 Information requested in September 2016 for the 2015/16 tax year must be provided December 2016