Joshua Croft: Pension scheme member compensation explained

Compensation complication

clock • 3 min read

Joshua Croft explains the ins and outs of compensation rules covering pension scheme members..

A compensation payment may be due to a pension scheme member because of poor advice, bad administration or a failed or poorly performing investment. The aim of compensation is to put the client back in the position they should have been in, but because of how HM Revenue & Customs (HMRC) view compensation payments this isn't always straightforward. The current guidance from HMRC states that where compensation is awarded to the member and paid into a pension, this payment is deemed to be a third-party contribution which would attract tax relief. This is because HMRC deems the complainan...

To continue reading this article...

Join Professional Adviser for free

  • Unlimited access to real-time news, industry insights and market intelligence
  • Stay ahead of the curve with spotlights on emerging trends and technologies
  • Receive breaking news stories straight to your inbox in the daily newsletters
  • Make smart business decisions with the latest developments in regulation, investing retirement and protection
  • Members-only access to the editor’s weekly Friday commentary
  • Be the first to hear about our events and awards programmes

Join

 

Already a Professional Adviser member?

Login

More on Pensions

FCA outlines thinking on using pension pots for house deposits

FCA outlines thinking on using pension pots for house deposits

FCA CEO Nikhil Rathi ponders radical thinking on pension savings

Jonathan Stapleton
clock 02 April 2025 • 3 min read
IFS: Growing DC market needs reform to help savers manage risks

IFS: Growing DC market needs reform to help savers manage risks

Savers facing ‘stark’ challenges managing DC pots in retirement

Martin Richmond
clock 02 April 2025 • 6 min read
AJ Bell sells Platinum SIPP and SSAS business in £25m deal

AJ Bell sells Platinum SIPP and SSAS business in £25m deal

InvestAcc Group takes over £3.2bn book of business

Jenna Brown
clock 27 March 2025 • 1 min read