The workplace pension provider Now Pensions has committed to topping up the pensions of non-taxpaying members for the 2017/18 and 2018/19 tax years.

The group made the commitment to members who don’t pay income tax, but who are nonetheless permitted to basic rate tax relief on contributions up to £2,880 a year. This would normally be topped by HMRC to a gross £3,600 for basic rate taxpayers.

This year the nil rate of tax band will increase to £11,850 while the auto-enrolment threshold remains at £10,000, meaning enrolled members between the two figures will be disadvantaged in net pay schemes.

In a statement Now Pensions said: “Now: Pensions does not think it is right that members earning below £11,850pa are being unfairly treated through no fault of their own. That’s why we are making up the shortfall ourselves.”

Last month, research by Hymans Robertson revealed that only three of the top 17 master trusts offered pension tax relief to their lowest paid members.

Nest, Legal & General and The People’s Pension are the master trusts that do currently offer tax relief to its lowest paid members, while Now Pensions doesn’t offer tax relief at source but does make up the shortfall in lost tax relief for members.

Hymans Robertson head of scheme design and provider evaluation, Jesal Mistry said: “The fact that only three of the master trusts we surveyed offered tax relief at source is not just surprising but a major concern as it could mean thousands of individuals auto-enrolled are not receiving the tax relief they were promised.

“When the relief at source method is used pension deductions are taken from net pay and the basic rate of tax-relief is then credited by the pension provider and claimed back through HMRC.”

Now: Pensions said it would be contacting employers “so that they can spread the word to staff”, who will then be directed to a claims form on the Now: Pensions website.

The provider will then liaise with HMRC to confirm the relevant tax details over the year and, if confirmed, will then credit members pension pots with the income tax relief they would have received in a relief at source arrangement.

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