A long wait to receive the NPA top up
Since 2014 over 1m, mainly women, in net pay arrangement pension schemes, many of which are in the public sector, have been paying more for their pensions than those with a similar level of earnings in relief at source pension schemes.
The so-called net pay anomaly occurs because those who are auto- enrolled because they earn over £10,000 but less than £12,570 cannot receive any tax relief on their pension contributions as they are not taxpayers, whereas those with the same earnings in a relief at source pension scheme are automatically granted 20% tax relief which is claimed by their pension provider and invested in their fund.
It was announced at the Autumn Budget 2021 that HMRC will pay a top up to the affected individuals equivalent to the lost tax relief, but it will take until the end of tax year 2025/26 to pay the first top up relating to the tax year 2024/25.