It’s good that Corporate Adviser is picking up on a scandal broken on this blog 3 months ago. It was broken by HMRC in January , by Kate Upcraft immediately , confirmed by LITR, and communicated to my readers immediately.

January 2025

Thanks most of all to the Low Income Tax Reform Group.

That was three months ago, HMRC seems to have kept the lid on things, but John Greenwood is not someone to shut up.

The HMRC still seem to be proud of delaying repayments till at least this time next year. And they are are allowing the scandal to be spun the wrong way.  Read on…

DB and DC

Corporate Adviser marks this a DC matter, DC contributions are only a part of the problem.

Unfortunately, there is an assumption that it is a DC workplace pension problem.  Get it right, this is not just about “DC” – this covers all contributions including DB

Despite marking this “DC” in its article, the impact of the net pay scandal is mainly falling on low paid contributors to funded and unfunded DB schemes. This is not a DC issue, it is an issue about low incomes tax reform and it is atrocious that it has had so little attention from the public sector unions who have had their eyes elsewhere.

Don’t belittle the sums involved – or timing!

£70m doesn’t sound a lot for HMR but £70 each year since 2014 is a lot if you have low income

Here is the news repeated three months later in Corporate Adviser (exclusively!)

Here is the news at the time of the HMRC announcement (in Pension Age)

Here is what I said in January alongside Pension Age

Baroness Ros Altmann , LITR and the many individuals who have been campaigning for proper restitution had been prepared to wait for the limited promise , provided it was paid at the latest at 2025.

But it seems to be a matter of little interest to HMRC and HMT to the point that nothing has come out officially.

Clearly HMRC will get away with not paying the amounts due as promised and think they’ll get away with it.

I want a proper announcement of delays, not something leaked out like this

---

Disgrace on HMT and HMRC

All I can say in addition reading the pension press is that the impact on the poor is being treated by the press as nothing more than a DC mess. Here is the conclusion to what I wrote in January.

It may not mean any bother to pension scheme administrators, but it will mean that the poor who pay under auto-enrolment into workplace pensions, will be denied money due back another year.

They are not getting any notice of this, they are not reading HMRC pension newsletters, Pension Age or this blog. In short they are being marginalised behind the lead stories on Inheritance Tax.

Disgrace be on your head HMRC.

Corporate Advice’s article repeats the sad news that individuals will have to claim refunds.

The Government says individuals will not need to confirm their entitlement as HMRC will identify those eligible individuals based on information already provided. It says it will write to individuals who will need to confirm or provide their payment details via a digital service for the top up payment to be made.

---

Obligation on HMRC to pay not applicants to get it right

We at LITR and I on this blog have long said that the payment should not be by application, many people are frightened of doing anything involving HMRC , not least because of fear of being scammed. HMRC appear to have adjusted their assessment of take DC pot or reduced their contribution to their pension (as if they were paying tax)

Government projections predict IT and operating costs of £38m to implement the policy. In 2023 the Government predicted an estimate cost to the Treasury of £10m in 2025/2026, rising to £15m in 2026/2027. While some of the cost will be mitigated by a reduction in means-tested benefits and other reliefs, this suggests less than half of eligible workers will actually receive the payments.

That tells you all you need to know of HMRC’s attitude to benefits for the low paid, Pension Credit is the great exempla. If you think that treating the vulnerable as if they were super-smart over tax affairs, then you need to speak to the Low Incomes Tax Reform Group.

An obligation on pension schemes to operate on RAS where possible

The Government has accepted that the relief at source payment system works best for those on low income while net pay works best for those paying tax , especially those paying higher rate tax.

A high number of DC schemes and all DB schemes operate on a system that’s best for higher rate tax payer, this is John Greenwood’s observation in Corporate Adviser

Around a third of UK multi-employer DC providers operate on a net-pay only basis. Most single employer DC schemes also operate on a net-pay basis.

This of course does not count the numbers of DC savers in relief at source (where there is no problem getting a savings incentive whether paying tax or not).

Nest and People’s operate net pay and L&G offers a choice of net pay and relief at source master trusts, mainly at the insistence of Tesco who operate two payment systems to save low earners from being scalped by net pay. Actually DC workplace savers, many of whom are in relief at source GPPs are well off relative to DB savers who are all in Net Pay Plans.

But this is not to let off the net-pay DC master trusts who have not bothered to switch to relief at source but continue to operate net pay systems for the benefit of the higher rate earners who they most benefit from.

The praise to L&G cannot be said for most other insure master trusts and consultancy run schemes.

The HMRC announcement made to Corporate Adviser is outrageous

An HMRC spokesperson said: “The government remains committed to this policy, which will see approximately one million individuals in net pay schemes offered an annual payment of around £70. Top-up payments for individuals will be made for the 2024 to 2025 tax year and subsequent years, but the payments for 2024 to 2025 are likely to be offered later than planned — in 2026.”

There is nothing new here from HMRC and their attempts to promote this as good news is bad news. 

The money due under this scheme should go back at least ten years to the point where net pay savers started being defaulted under auto-enrolment without tax relief. To rebate those losing out to 2024 was a bad joke for those ten years out of pocket and that they have to wait another year is a work joke still.

Sadly, those people on low incomes get no help from Government and very little help from the pension press , consultants, press or indeed out of power politicians.

It takes a tenacity to point out that poor people are being shafted by an unapologetic and callous HMRC.