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

Divorce, pensions and professional collaboration in the HNW world

Divorce, pensions and professional collaboration in the HNW world

'Beware the attraction of the simple solution'

Richard Kershaw
clock 16 February 2026 • 3 min read
A century of the state pension – and why the next redesign is overdue

A century of the state pension – and why the next redesign is overdue

'A pension promise only works if contributors believe it is fair and durable'

Adam Cole
clock 16 February 2026 • 4 min read
Pensions: The overlooked asset in divorce settlements?

Pensions: The overlooked asset in divorce settlements?

Practical steps to narrow the divorce pension gap

Alistair Myles
clock 11 February 2026 • 5 min read