Pension Fund Annual Allowances

We have had a couple of requests to pay the tax bill up front to HMRC where an individual's pension contribution exceeds their £40k annual allowance. In these cases the Pension Fund pays the tax bill and then when the individual retires, he/she has a reduced pension which may or may not exceed the amount of tax paid, depending on how long they live.

Has anybody else experienced this and if so how does the accounting work?
  • We have had these for a few years and pay them to HMRC quarterely as part of the accounting for tax process. We treat them as Transfer out for the relevent employer and our auditors have been happy with it.