Pensions Simplification

Contribution refunds

DWP legislation permits occupational pension schemes to make a refund of employee contributions when the employee leaves pensioned employment before completing two years' service. Currently the scheme pays tax at 20% and deducts that from the amount refunded to the member. In the new regime the tax charge will continue along these lines but the first £10,800 of any refund will be taxed at 20% and any excess will be taxed at 40%.

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