Pension Input Periods (PIPs)
The PIP is the period used to assess annual increases in the value of members’ benefits for testing against the annual allowance (AA). Increases are measured against the AA for the tax year in which the PIP ends and, to the extent the AA is exceeded, a 40% tax charge known as the “AA charge” is payable by the member.
Position pre-8 July 2015
Until 8 July 2015, it was possible for PIPs not to coincide with the tax year. Further, an individual could have several PIPs relating to different pension arrangements. However, an individual could not have more than one PIP relating to the same arrangement ending in the same tax year.
Transitional provisions (8 /9 July 2015 to 5 April 2015)
In order to align all PIPs with the tax year from 6 April 2015 the following measures were introduced:
- all PIPs which were open on 8 July 2015 ended on 8 July 2015
- the next PIP for these arrangements ran from 9 July 2015 to 5 April 2016.
This meant that all existing arrangements on 8 July 2015 had two or three PIPs ending in the tax year 2015/16, depending on the start date of the open PIP.
For new arrangements that had their first PIP starting between 9 July 2015 and 5 April 2016, the PIP started on the normal commencement day (broadly, this is when benefits begin to build up under that arrangement, or when the first contribution is paid) and ended on 5 April 2016.
PIPs from 6 April 2016
Since 6 April 2016, all arrangements have a 12 month PIP which runs from 6 April to 5 April.
Commonly used abbreviations in pensions
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