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...
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