The Annual Allowance

This is the figure HMRC most cares about, because the tax is payable as under Self-Assessment…

Your Pension Input Amount, often shortened to PIA, is used to check whether your pension growth has gone over the Annual Allowance. This is one of the most misunderstood figures in the NHS Pension Scheme.

Many members assume the Annual Allowance is based on the pension contributions they and their employer have paid during the year.

It is not.

For NHS defined benefit pension purposes, your Pension Input Amount is not based on your pension contributions. In fact, you can largely ignore the contribution figure when thinking about Annual Allowance.

A helpful way to think about your NHS Pension contributions is as a membership cost for being part of the Scheme. They are not the same as money being paid into a personal pension pot in your name.

Instead, your Pension Input Amount measures the increase in the value of your NHS pension benefits from one tax year to the next.

NHSBSA does this by comparing:

- the value of your NHS pension benefits

at the start of the tax year

- with the value of your NHS pension benefits

at the end of the tax year

  • For the 1995 Section, the automatic lump sum is included in the calculation. This means the calculation broadly works like this:

    Annual Pension × 16, plus automatic lump sum

    Because the automatic lump sum is usually three times the pension, a factor of 19 can also be used.

    (i.e. 16 x pension + 3 for the auto lump sum).

  • For the 2008 Section and 2015 Scheme, there is usually no automatic lump sum, so the calculation is normally based on:

    Annual Pension × 16


The calculation uses the prescribed formulae:

annual pension × 16, plus any separate automatic lump sum

The difference between the inflation-adjusted opening value and the closing value is your Pension Input Amount.

That figure is then tested against your available Annual Allowance.

For most members, the standard Annual Allowance is currently £60,000, before any tapering, carry forward or other pension savings are considered. If your Pension Input Amount is higher than your available Annual Allowance, an Annual Allowance tax charge may apply. NHSBSA confirms that Annual Allowance is based on pension growth, and BMA guidance confirms the current standard Annual Allowance is £60,000.

This can happen even if you have not personally paid anything close to £60,000 in pension contributions.

Large Pension Input Amounts can arise because of:


  • significant pensionable pay increases

  • Promotions which result in a higher pensionable pay

  • Clinical Excellence Awards - not to be confused with Clinical Impact Awards

  • Increases in Final Salary

  • The addition of extra pensionable service - such as Added Years, or Additional Pension

  • Inflationary Changes

  • McCloud remedy adjustments

  • the interaction between legacy scheme benefits and 2015 Scheme benefits

  • Changes in Career and Job Roles

Your Pension Input Amount is a tax figure.

It is not the value of your pension pot, it is not the value of your actual pension contribution, and it is not the amount you can spend in retirement.