Getting tax sorted after retirement

iansmum

xylophone wrote: »

It seems likely that the Carer's Allowance is paid without tax deducted (like State Pension) but because it is a taxable benefit, must be reported to HMRC so that any tax due can be taken from one or other of your husband's occupational pensions.

Are you saying that your husband has two LGPS pensions that should now be in payment (as well as an annuity from the AVCs) but aren't because the Pension Administrator has not yet completed the calculations?

That’s right. Back in 2012 he was offered the opportunity to split his pension, can’t remember why, and we were advised that was best for us. So that pension was the deferred one and then another was started which is our active one. Still employed by the same local authority, just two separate pensions. We didn’t ask for a forecast on the deferred one at the same time as asking for the current one when he handed his notice in as we assumed we would get all the info on both, and when we asked they said we had to apply for it separately as it is a separate one. Basically now we seem to be stuck in a ‘20 working day cycle’ and every time we do something else we start that time frame again! It’s just taking so long. We are going to ring them this week to see if they can explain it but they never seem to give us a straight answer when we do. I don’t understand why the people who have sent us the info for the deferred one are asking for avc details when we have already done that with the other one!
And yes, thanks, we will ring HMRC about the carers allowance. Thanks.

xylophone

Back in 2012 he was offered the opportunity to split his pension, can’t remember why, and we were advised that was best for us.

Silvertabby would be best placed to comment but this is possibly to do with the age at which benefits could be taken without actuarial reduction?

I imagine that at least four months before his selected retirement date, your husband should have contacted the Administrator to claim both his deferred pension and his active pension and to sort out the position concerning the AVCs.

See https://forums.moneysavingexpert.com/discussion/comment/75857027#Comment_75857027

Then the Administrator would have calculated his benefits under both schemes and how much of the AVC could be used to provide the PCLS.

He would then have made his choices from the options available so that Admin could pay the lump sum(s) and monthly pension (s) - would the Pru (or another insurer) pay the small annuity?

Judging from Silvertabby's comments, it seems possible that your husband may need to wait for up to another eight weeks or so for Admin to finalise the position?

After that he can check his tax situation with HMRC.

He might want to set up a Personal Tax Account.

https://www.gov.uk/personal-tax-account

iansmum

Hi again. Finally nearly three months after retirement date we have made a bit of progress! After countless phone calls we have our letter detailing our calculations for the active pension including the AVC. They have also included just under £90 in interest as they have taken so long, but have lumped this into the retirement grant and sent us a certificate to send to HMRC as this small amount will be taxed! Now the deferred pension. As we weren’t aware we had to ask for this separately it didn’t reach them till 7th June and as they need ‘20 working days’ we don’t expect to receive this till the first week of July. Though we have had the estimate and have declared our intentions. But they have taken the pension as of the 1st June even though hubby retired on March 31st. A friend who is a former IFA says we should be getting this from the retirement date and we have lost a couple of months pension through it. Can anyone clarify?

xylophone

Can anyone clarify?

You might try a PM to Silvertabby, the LGPS guru!:)

I am wondering whether the deferred pension is only calculated from date of claim?

Silvertabby

xylophone wrote: »

You might try a PM to Silvertabby, the LGPS guru!:)

I am wondering whether the deferred pension is only calculated from date of claim?

Hmm - If I'd dealt with this, I would have automatically calculated the benefits from both the deferred and the live record at the same time. I'm aware that different LGPs do things differently, but it's worth asking for payment of the deferred pension to be backdated to the date of retirement from the live record, as it would have been a reasonable assumption that you would be taking all of your pension on retirement.

3 months ! My old boss would have have someone's guts for garters, and quite rightly so. We used to run calcs with AVCs pre retirement, based on the value of the AVC as at the date of calculation and estimated final pay figures from the employer (with the rider that these will change - but rarely by much as we were only working a month ahead). That way, the member had some reasonably accurate figures to look at and time to make their decision. There are several options available when AVCs are involved, and choosing which one to go for isn't a 5 minute job.

iansmum

Believe me we have tried to expedite this as much as we could. He actually gave his notice in on 21st February for a March 31st finish. First his line manager dragged her feet and we didn’t hear from HR till 13th March. Then on 1st April and again on 20th May we had email and letter from different people saying there would be a delay because they had to get the AVC funds sorted. We requested the deferred pension estimate on 1st May and didn’t get that till the end of May. We rang again yesterday for the umpteenth time and they said the active one was calculated and then lo and behold we got the letter in the post today! Once it’s all sorted there will be a not so friendly letter going in to someone important to complain about all this. Anyway, we will look into the timing of the deferred one and see what we can find out as I agree, they should have given us all our options in one go and we could have decided there and then which way to go. Thanks for your continued help.

Be_Happy

Just a word of warning for future use.

You can't receive State Pension and Carers Allowance at the same time. It's one or the other, whichever is higher. So Carers Allowance will stop when State Pension starts.

xylophone

3 months ! My old boss would have have someone's guts for garters, and quite rightly so.

This NHS Scheme widow was fortunate to have her own salary otherwise might have been in dire straits....

https://www.thisismoney.co.uk/money/pensions/article-7154837/Widow-waits-six-months-pension-NHS.html

iansmum

We’ve now had the lump sum from the active pension paid into the account and am assuming that some of that pension will be there on Friday! They also paid us £88.88 in interest as they hadn’t paid it within the time frame. We had a couple of queries so we gave HMRC a call ( yes, we actually got through!) and they said they wouldn’t bother collecting the tax on the £88 as it wasn’t worth it! Then we said we wanted to declare that hubby is now getting carers allowance, so they got the details and he said he would action that. Today an email from them saying that his tax code has been changed so when we checked on Government Gateway they had put it down as ‘state pension’! Anyone know if that’s how they describe any taxable benefit or is it a mistake?