LOW EARNER'S PENSION PAYMENT: WHAT EMPLOYERS NEED TO KNOW
- ASESA Solutions Ltd
- 11 minutes ago
- 2 min read
HMRC has announced that from August 2026 it will begin contacting around 1 million eligible individuals regarding the Low Earner's Pension Payment. The payment is intended to help certain low earners achieve similar pension outcomes regardless of the type of workplace pension scheme they are enrolled in.
What Is the Low Earner's Pension Payment?
Some employees may not receive income tax relief on their pension contributions because of the way their workplace pension scheme operates.
To address this, HMRC will identify eligible individuals and contact them directly regarding any payment they may be entitled to receive.
Who May Be Eligible?
An employee may be eligible if they:
Earned close to the Personal Allowance threshold.
Contributed to a workplace pension through a Net Pay Arrangement pension scheme.
Did not receive income tax relief on their pension contributions during the relevant tax year.
HMRC will assess eligibility separately for each tax year from 2024–25 onwards.
What Does This Mean for Employers?
The good news is that employers do not need to take any action.
HMRC has confirmed that employers and payroll teams are not required to:
Apply on behalf of employees.
Assess employee eligibility.
Amend payroll records.
Contact HMRC regarding the payment.
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HMRC will manage process directly with eligible individuals.
What Should Employers Tell Employees?
If employees have questions, employers can reassure them that:
Eligible individuals will be contacted directly by HMRC.
There is no need to make a separate claim.
Instructions on how to accept the payment will be provided by HMRC.
Key Takeaway
Employers do not need to take any action regarding the Low Earner's Pension Payment. HMRC will identify eligible individuals and contact them directly, helping ensure that lower earners receive fair pension outcomes regardless of their workplace pension arrangement.
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