It is a shame I am writing this in 2026 when the promise was made in a Government’s manifesto six years ago and enacted  in 2024. The 1m workers who pay into pensions but get no tax relief pay into occupational pensions (public and private). They are auto-enrolled when they earn more than £10,000 pa but get tax relief only if they earn more than £12,500 pa, 1m people are captured in that bracket and most of them are in schemes that only give incentives when tax is paid.

This was deemed unfair, those in schemes like People’s and Nest and one of the L&G master trusts give relief at source of personal contributions being received (RAS), but defined benefit schemes such as the public schemes (including LGPS), USS, Railpen and others – do not pay incentives to non tax-payers. Some DC plans such as NOW and the fast diminishing single employer DC plans do not pay  incentives. It is not just unfair, it is ludicrous. Many of those impacted were the most harmed by austerity.

It is also ludicrous that some low earners are herded into salary sacrifice schemes where they lose their relief at source and are deemed not to be contributing (as the employer is deemed to pay all the contribution). It is important that employers review their salary sacrifice schemes so that low-earning net pay members  do not miss out on the £70 per year for paying into net pay schemes.

The Corporate Adviser report explains why the payments are so delayed

The changes took legal effect from April 2024. But payments of £70 each due to a million of these low earners in net-pay pension schemes were delayed by over a year because of IT and administration issues.

The HMRC have promised to pay those due two years rebates (those paying pensions but not tax into occ schemes since 2024) £140.

It will cost HMRC more than expected to make the payments. The extent of payments will depend on low earners offering bank account details to HMRC over the next few months. I have been on a committee that originally was set up by Ros Altmann and now consults with HMRC, the payments will be fraught with concern from low paid earners afraid of being scammed either by HMRC or other agents who might drain their savings rather than adding to it.

We know from take up of pensions credit that there is a group of low earners who never make a claim. The vast majority simply have no understanding of the syste,

But overall, these windfall payments will become expected and delightful to people for whom £70 per year is a lot more meaningful from most of  those reading this blog. And it is a year. So long as all schemes do not swing onto a “relief at source” basis , the £70 windfall payments will continue.

Of course there is no incentive for occupational schemes to move. First there is the cost of moving , second there is the aggravation to payers of higher tax who will have to claim back higher rate tax typically through self-assessment. Those who will be aggravated include all those in net pay schemes (including all the MPs who are in their own DB scheme).

This is a horrible situation that has been created over the past 40 years by the creation of RAS for personal pensions and run alongside 226 pensions (remember them) and then as the continuation of pension saving as DB pensions started closing in the private sector.

Auto-enrolment has brought net pay occupational DC pensions into direct competition with RAS occupational schemes and RAS group personal pensions. What you get paid into your pot or to buy pension as a low-earner, is down to chance.

It wasn’t till auto-enrolment came along and the lower earning limit to be enrolled became lower that the lower income tax threshold , that the net pay anomaly arose (this was around 2014 and has been charted better than any by Kate Upcraft).

During the rest of this year, we should be getting publicity about this from HMRC. HMRC has been working hard to get the marketing right so that what is advertised is seen as good news and so as many of the 1m as possible , send in details of their bank accounts.

Of course it was a lot easier for the money to transfer to their pension schemes from their salaries, that took no action on their behalf – they were auto-enrolled. These people have no natural champion, they are the people who are talked of as “not worth the levies our schemes pay for them” by commercial schemes (I’ve heard the phrase). But they are every bit as valuable as human beings as the high salaried who make commercial DC schemes and employers most money.

I hear a lot about investment “fiduciary duty” , but there’s fiduciary duty’s due to low earners who for 12 years have been ripped off by net payments from salary to pension.