This guidance is addressed to the HSC as administrator of the Health and Social Care Pension Scheme 2015 ('HSCPS 2015' or 'Scheme'). It sets out how a benefit reduction should be calculated in certain circumstances such as retirement or transfer, following an individual's election to exercise the 'scheme pays' option in respect of tax charges incurred due to the Annual Allowance ('AA').

This document relates to paragraphs 16(16)(b) and 16(3) of Schedule 3 of SR2015/120, under which the adjustment to the member's present or future benefits should be calculated by reference to advice provided by the Scheme Actuary for that purpose.

No factors or advice provided for the HSCPS should be used for reductions to HSCPS 2015 benefits.

No factors or advice issued in the past for the HSCPS 2015 should be used for Scheme Pays calculations.

Where a transitional member has benefits in both the HSCPS and the HSCPS 2015, the Scheme Pays charge should be applied to the Scheme in which the tax liability arises. For the purposes of determining this the Annual Allowance (including any carry forward) should be pro-rated between the Schemes based on the increase in value accrued in each Scheme.

The following changes have been made when reviewing this guidance:

• Important information around the expected audience for the guidance, use of the guidance, review of factors, compliance and limitations applies across all sets of guidance. Rather than being repeated in each set of guidance, this can now be found on the scheme home page. It is important to read this information alongside the guidance.
• Calculation methodology: No changes have been made to the calculation methodology.
• Examples: There are no examples in this guidance. Worked examples, using the calculation methodology, can be found in prior versions of the guidance (though please note that these use historic factors).
• Factor tables: The "Factor Tables" tab contains the names of the tables that are referenced in the calculation methodology. The tables of factors themselves can be found in the most recently published "Consolidated Factors Workbook" which is available by clicking the "Download current Consolidated Factors Workbook" button on the scheme's home page.
• Assumptions: The key assumptions underlying the factors in each note are contained in the Consolidated Factors Workbook.
• Regulations: The regulations that require the production of the actuarial factors and/or guidance that is the subject of this note are summarised in the "Regulations" tab.

This guidance note should only be used for calculating the reduction to benefits following an election to utilise the Annual Allowance Scheme Pays mechanism. It should not be used for any other purpose.

HSC should satisfy themselves that the pension reduction resulting from a Scheme Pays election complies with all legislative requirements. Any legal advice in this area should be sought from an appropriately qualified person or source.

This guidance note does not cover the method for determining the amount of any Annual Allowance.

This guidance note also does not cover the method used to calculate the negative DC balance at retirement or other relevant date. This guidance has been provided separately to HSC in a note dated 27 June 2016.

As a result of McCloud remedy, some members may have a new or revised annual allowance tax charge for one of the years during the remedy period (2015 - 2022) which may be determined/notified to the scheme after the date of publication of this guidance. This guidance is not to be used to determine debits in relation to any such charges, please refer to the separate guidance on scheme pays for McCloud eligible members for the correct approach.