Crowd-sourcing a solution to the net-pay pension problem.

net pay

The people who are losing out on Government contributions into their workplace pensions because their schemes work on net pay rather than “relief at source” are oblivious of this problem, they serve coffee in Costa, work in nursing homes and clean trains. They are not pension experts and rely on their employers , pension providers and the Government to do the right thing. They are some of the most valuable and most vulnerable new savers in our auto-enrolment program and so far they have been let down.

They have their champions, I name among them Adrian Boulding -Director of Policy at NOW, Kate Upcraft,  – freelance pension and payroll expert, Ros Altmann- our pension minister and Gerry Flynn who wrote on my recent blog on this subject

Now that payrolls now use RTI to HMRC, surely the process of returning tax relief does not have to wait until the end of the tax year?

The impetus for his comment was a suggestion from NOW pensions that we could work around the “expensive to solve” problem of moving a net pay system to relief at source “in running”.

I would not have run that blog, had I not been barraged by twitter comment on the subject from Karen Wake, Will Aitken, Ian Macquade, Alan Sneddon and without the constant attention to this issue from Andy Young (in my ear with actuarial persistence).

Then in my inbox yesterday  I got this

I reed yesterday’s blog on a solution to the NPA conundrum with interest. … you might want to know that there is  no need for any complex end of year reporting to HMRC. All employers are required to include the NPA deduction  that period every time they report to HMRC i.e. weekly, monthly or whatever the pay frequency is.

The figure can also be amended after year end of a file called an EYU if it turns out there was an error.

So the only additional reporting would be for HMRC to request employers to supply a YTD figure or for HMRC to accumulate it. We have done this since the start of RTI because NPA contributions are not added back in for UC purposes in the same way as RAS contributions because of the (alleged tax relief).

As a matter of interest I’ll be raising this with the DWP UC team on 30th November when I see them as I want to understand what they are doing with UC to ensure that those in NPA aren’t being that unfairly treated compared to those in RAS as I think they are!

If you want to look at the data data items list it’s here – item 61 –

If my correspondent wants to be revealed , I will lift the veil of anonymity, but between NOW, Gerry and her, I think we are getting a solution to this problem that can suit HMRC, DWP and the occupational schemes (including the master trusts).

This isn’t some vain-glorious showing off from a  social media site, it is an example of how new technology can bring various people together to solve a social problem. Nobody’s going to bet paid for this and the true heroes of the piece will remain anonymous.

A further mail demonstrated the positive spirit in which this conversation has been conducted

Happy to talk/help on this as I’m very disappointed that DWP haven’t done more on this other than shout at TPR who I think have done a sterling  job on AE often with their hands tied behind their basks. If we used RTI data to solve this it would of course also be a solution in the public sector statutory schemes where this problem bites even more 

Perhaps the DWP should try crowd-sourcing from social media little more! It’s a lot easier and quicker than running a consultation!

net pay 2

Oh and here’s that poll again – on NOW pension’s potential solution

Results so far are positive but keep those opinions coming. We can of course widen the question to include the comments above. If you want to leave your comments at the end of the blog, please do- or just mail

To be continued….

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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2 Responses to Crowd-sourcing a solution to the net-pay pension problem.

  1. Alan Chaplin says:

    Completely agree. Hmrc have data on employee contributions and tax paid and relief claimed so that can be used to identify people and the amounts involved. Your annual sweep also works I think.

    Think we need treasury/dwp to state whether they agree this relief is owed. If they do then the problem is how to pay – I don’t think hmrc know which scheme(s) the contributions went to but they could send to employer to forward on or to members or nest.

    If they don’t agree money is due then it’s a campaign to change that position and going forward make it very clear to employers choosing schemes and members in them how to check they are getting the most tax relief they can.

    Alan chaplin +44(0)7703 164211


  2. henry tapper says:

    It’s the right of every citizen to optimise his or her tax position and a requirement of Government to ensure people know how to do this. I think it is also a fiduciary duty of trustees to ensure their members get both the information and the opportunity to act on it (to their advantage).

    As you say- we may need to move on- but let’s see if HMRC and DWP pick up on this!

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