Around one million people, the majority of them women, will receive a letter from HMRC informing them they could be entitled to a £70 pension boost. The payments are for low earners who missed out on tax relief when contributing to a pension pot.
Who is eligible for the top-up?
When Brits contribute to a pension pot, in what is known as tax relief, the Government allows some of the money that would usually be paid to the Treasury to be put into their savings instead. But some people on lower wages contributing towards a net pay arrangement (NPA) pension scheme got back less than they should have done if their pot was overseen by a relief at source (RAS) scheme.
The amount of money individuals can receive will vary depending on their circumstances, but it will usually be £70. To give back to people what they are owed, officials are distributing a low earner's pension payment, to start with, distributed in the 2024-25 tax year, and automated payments starting in subsequent years.
How will HMRC notify people?
People can expect to receive information from HMRC by letter or via their online personal tax account, the BBC reports. The Government will NOT text, email or call about it.
It was explained in 2022: "The government believes it is right to rectify this anomaly. The government will pay a top-up to low earners making contributions to pension schemes using a net pay arrangements in 2024 to 2025 onwards.
"In the following tax year, HMRC will notify those who are eligible and invite them to provide the necessary details for the top-up to be paid direct to their bank account.
"As a result of this change, low earning pension savers should receive similar outcomes regardless of how their pension scheme is being administered for tax purposes."
Estimated number of beneficiaries
The Government added that it expected the measure will "positively impact on an estimated 1.2 million individuals". From April 2024, this would be an estimated 1.32 million people.
"Women are estimated to make up 75% of those earning below the personal allowance and contributing to a pension scheme that uses net pay arrangements," officials said.
