Civil Service Classic pension - actuarial buyout from redundancy compensation

Tonywfffm

Hi - I am taking voluntary redundancy at 57, and have the maximum compensation of 21 months salary.
My actuarial buyout is approx £66k, from which I gain around £3k pension pa and £5.8k lump sum.
My compensation is in excess of the £66k but I can't find out anywhere whether the compensation is taxed BEFORE paying the £66k (in which case I won't have enought but my employer will meet the shortfall), or AFTER in which case I will have some left over that will be subject to tax.


I have hunted high and low but can't find any clarity on that point and the sums involved make a significant difference to my choice whether to buy out or not.


Has anyone gone through this process at a similar point and can advise? I'd be very grateful. I have found lots of posts around the topic but all seem to relate to contributing to the buyout and not using the compensation. Apologies if I've been blind


Many thanks

GunJack

have you called MyCSP and your union for their take on it?

Dox

Ask your employer or MyCSP (and get the answer in writing).

hugheskevi

My compensation is in excess of the £66k but I can't find out anywhere whether the compensation is taxed BEFORE paying the £66k (in which case I won't have enought but my employer will meet the shortfall), or AFTER in which case I will have some left over that will be subject to tax.

The buy-out cost is an employer contribution to the pension scheme, hence not taxable, and your redundancy package is the buy out plus any residual lump sum. The residual lump sum is a redundancy payment and taxable as such (and so if under £30K would not be taxed).

Tonywfffm

Many thanks for your quick replies guys.


Yes I have asked my employer/MyCSP but got very uncertain responses. I am awaiting a formal reply but for a variety of reasons need to make a quick decision

hugheskevi wrote: »

The buy-out cost is an employer contribution to the pension scheme, hence not taxable, and your redundancy package is the buy out plus any residual lump sum. The residual lump sum is a redundancy payment and taxable as such (and so if under £30K would not be taxed).

Many thanks for this - this is exactly what I thought but couldn't find anything to support it :T:beer:


Cheers