PILON Deductions?

billpaul812

This is about redundancy PILON and the LGPS.

At the meeting that started my 30 day consultation period I was presented with the gross figure for what I will get paid for my 12 weeks PILON. I was told this will be paid in 30 days time when I am formally made redundant and that will be the end of my employment and the start date of my pension The person I was meeting couldn't be clear to my satisfaction what deductions will be made from the gross PILON figure. I have asked in writing what the deductions will be for the following.

• Tax
• NI
• LGPS
• AVC

That my Pension will start in 30 days time was a surprise given that I will be getting pension over the same period that my PILON covers.

Does this all sound right?

If it is then presumably I won't get a deduction for LGPS payment and same for AVC? OR if I do get a deduction for LGPS/AVC then my pension shouldn't start until the end of my 12 week notice period should it?

Anyone know how this is supposed to work?

Thanks.

greatkingrat

The redundancy payment itself is tax-free up to £30k, but any payment in lieu of notice is taxed just as it would have been if you had worked the 12 weeks.

There would not normally any pension deduction made for that period, as you haven't actually worked it.

Suffolk_lass

The answers to your questions will depend on what the termination clauses in your contract of employment say. You might find the ACAS site useful http://www.acas.org.uk/index.aspx?articleid=4540 and I believe there was a measure in last year's budget that will change things from next April to make it more straightforward and consistently taxable.

hyubh

billpaul812 wrote: »

Does this all sound right?

No, pay in lieu of notice is expressly not pensionable under the scheme regulations, so neither ordinary nor AVC contributions should be deducted:

http://www.lgpsregs.org/schemeregs/lgpsregs2013/timeline.php#reg20

See sect. 20.2(d). What your contract says will be irrelevant - the pension administrator (even if in house) won't knowingly make an adjustment to increase your pension by an amount you are not eligible for under the regs, so make sure you don't get contributions deducted in the first place.

billpaul812

Thanks you for the replies, very helpful.

What about National Insurance?

Peelerfart

National insurance will be payable. I wasn't lgps but recently made redundant from private sector, NI was paid.

billpaul812

What were your circumstances?
I'm over 55 and will be drawing a pension.
Does that change anything?