National Insurance and Schemes Awaiting Approval

Considerable concern was raised during the summer when the Contributions Agency announced that employer contributions to schemes awaiting tax approval would result in a national insurance liability.

The change in practice whereby employer contributions into funded unapproved retirement benefit schemes (FURBS) have become liable to national insurance contributions threatened also to affect occupational pension schemes working under interim scheme documentation, before definitive documentation can be made ready and approval sought from the Pension Schemes Office (PSO). By default, schemes awaiting PSO approval are unapproved retirement benefit schemes. As a result, the Contributions Agency announced that any employer contributions paid into schemes operating under interim documentation would give rise to both a primary Class 1 national insurance liability on the employee and also a secondary liability on the employer. Once the scheme gained approval, a refund of the national