Triviality pension pay out - mistake

Xbigman

I posted before about the possibility of having an old closed pension fund paid out to me under the triviality rules. We came to the conclusion that as I was only 43 I couldn't take this money anyway.

Out of the blue I recieved a cheque in settlement of this pension. I had written to the insolvency company winding up my previous employers asking for details, but never asking for this option to be enacted. I have certainly had no contact with the pension provider. Rereading the letter that arrived with the cheque they mention 'properly filled out paperwork' but I never filled anything out.

Last thought I had. Is there a tax issue here?

Current situation is that I have paid the cheque into my bank account and have not contacted the firm involved.

Any idea's on how to proceed?
Regards



X

Xbigman

Update.

Apparently the rules for schemes being wound up is different and a cash payout is possible at 43, but rare. The payout is taxable as per normal rules.
Regards




X

Debt_Free_Chick

Agreed. Trivial pensions can normally only be paid as cash at retirement age i.e. any age after 50. The exception is where the scheme is being wound up, when any trivial pension can be paid as cash, at any age.

Of the total paid out, an amount equal to what would have been paid a tax free lump sum at retirement can be paid tax-free. The remainder has 20% deducted by the pension administrator.

So ... yours may have been wholly tax-free; or part-tax free and part net of tax. If any doubt, ask the administrator to confirm.

HTH

Xbigman

The administrator (Century life) has not deducted tax. I'm pretty much waiting for the tax man to contact me.
Regards



X

Debt_Free_Chick

The taxman almost certainly won't approach you about it.

If it's all tax free (but only Century can confirm) then that's it - you can spend the lot :j

If only part is tax free, you'll need to declare it the taxman - a letter will do if your tax affairs are "simple" and you don't normally need to do a tax return. However, you would need to get Century to confirm the taxable amount, to prevent the taxman trying to tax the lot!

Suggest you get Century to confirm that it's either (a) all tax free or (b) the split between the tax free and taxable amounts.

HTH

Xbigman

Century life have confirmed there is no tax to pay. Apparently there is a tax free allowance (not a %) that goes up in line with the RPI each year which includes the 11 years since I left the job. So no tax.
Regards



X