The FPS has to comply with rules set by HM Revenue and Customs (HMRC). For example, there are limits on the amount of pension and lump sum which can be taken by a pension scheme member before tax charges apply.
The two main limits on your benefits are the annual allowance and the lifetime allowance.
The growth in the value of your pension each year must be compared with an annual limit set by the Treasury. If the value exceeds the limit, you would owe tax to be paid through self-assessment. Or you could choose for your employer to make the payment on your behalf and collect the amount due from your pension at retirement (this is referred to as the "scheme pays" method).
When benefits are due the total value must be tested against the lifetime allowance, which is also set annually. If the value exceeds the limit, tax would be deducted by your Fire and Rescue Authority (FRA) and paid over to HMRC.
The testing of the value of benefits is against all pension benefits you may have built up, including from other schemes. The FRA will ask you to provide statements for any other pension benefits you may have so that they can check the total value of your benefits before making payment from the scheme. The FRA can give you more details of the way in which tax rules work, how benefits are valued, current limits and the tax that would be charged.
You can get more information about tax allowances for both the annual and lifetime allowance, and protections that are in place, as well as special provisions for very high earners from HMRC.
www.gov.uk/government/organisations/hm-revenue-customs
HMRC has also produced the following guides:
Check if you have unused annual allowances on your pension savings - This provides guidance on carrying forward unused annual allowances from previous years if your pension savings are more than your annual allowance.
Work out your reduced (tapered) annual allowance – If you are affected by the tapered annual allowance, this will help you work out how much annual allowance you get for your pension savings for 2016 to 2017 and each later tax year.
Who must pay the pensions annual allowance tax charge - Find out when your pension scheme must pay some or all of the tax for you and when they can choose to do so.
If you have exceeded your annual allowance and you do not have enough carry forward from previous years to cover the excess, you must declare this on your self-assessment tax return, even if your pension scheme are paying the tax charge on your behalf. The following help sheet has specific information on declaring the annual allowance charge on your self-assessment return.