Can't interpret recent payslip/documents from Teacher's Pension Scheme, please advise me!

justcheckin

Hi,

Many thanks for all the help received so far as I've been trying to help my parents with their financial affairs after they have become messy and complex after a period of poor health.

Background: I found and brought into payment a 'lost pension' with the TPS on 11/03/2020. The pension related to 5 years full time service ending on 31/08/1975. The NRD for my mum's pension was age 60, she turned 74 on the date we asked for the pension to come into payment. On March 26th my mum received (net) and a document explaining the amounts as follows:

Your Pension

Annual pension (includes deduction of the amount

you specified to convert to lump sum)

£120.45

Current value including any Pensions Increase (PI)

£1388.73

Deduction effective from 11/03/2006 (State Pension Age):

Basic National Insurance Modification

£9.63

Current value including any Pensions Increase (PI)

£111.01

Your Tax Free Lump Sum

Lump Sum

£2997.15

Converted Lump Sum

£0.00

Less Outstanding Contributions

£0.00

LUMP SUM PAYABLE on 11/03/2006

£2997.15

Family Benefits:

£0.00

Lifetime Allowance LTA%:

2.92%

Other One Off payments

Lump sum interest of £642.51

Arrears of pension of £9825.00

Arrears Interest of £790.38

I realised my mum would end up paying tax on these amounts in tax year 19/20 and posted on here to clarify if there was anything which could be done about this, and found that the pensioner is allowed to request that backdated pension be ascribed to the tax years it would have fallen in, and my mum would need to contact the tax office to set up a schedule of how the payments should be treated. It was difficult to set this schedule up in 2019/20 tax year as the amounts received were (I thought) net, and I couldn't reverse engineer the amounts to their gross value to request the schedule of original payments in the previous 14 years.

She then received a payslip yesterday, for an amount paid to her today, with payslip advice as follows:

April 2020 Payslip

Payable on: 09/04/2020

Gross Amount

Gross Pay                                                        £16,882.82

Deductions Amount

Payment on account                                        £4,895.31

Payment on account                                        £4,929.69

TAX CODE 1250L                                            £5,878.00

Net Total                                                           £1,179.82

The net amount landed as stated above this morning.

Can anybody please help interpret this? In particular I need to try to understand the gross value so that I can divide it into 14 payments and ask for those 14 sums of money to be attributed to those years.

Any help in understanding the 'payments on account' and which parts might equate to which tax years would be very gratefully received.

Shimrod

justcheckin said:

Can anybody please help interpret this? In particular I need to try to understand the gross value so that I can divide it into 14 payments and ask for those 14 sums of money to be attributed to those years.

Any help in understanding the 'payments on account' and which parts might equate to which tax years would be very gratefully received.

Have you written to the TPS and asked them for a schedule showing how the arrears are apportioned across each of the years? I am a pensions trustee and we had to do a corrections exercise on a number of member pensions. For those with an arrears payments in the thousands, our pension administrators provided a schedule of pension/year for the pensioner to give to HMRC to ensure income tax was calculated correctly.

justcheckin

Shimrod said:
Have you written to the TPS and asked them for a schedule showing how the arrears are apportioned across each of the years? I am a pensions trustee and we had to do a corrections exercise on a number of member pensions. For those with an arrears payments in the thousands, our pension administrators provided a schedule of pension/year for the pensioner to give to HMRC to ensure income tax was calculated correctly.

Thank you, I will do that. Is your understanding of the phrase 'payment on account' that they have already attributed the arrears to the intervening 14 years, or is that something she still needs to request via the Tax office?

zagubov

I don't fully understand about the arrears. I previously hadn't realised there was a mechanism for claiming back unclaimed pension, but on another post, another poster said you can only claim up to six years arrears.
You could ask about this at the TPS website or email them. It may mean you can't spread the arrears over more than the last six tax years rather than fourteen.
There does not seem to be lots of information out there about this, and the web is a bit unforthcoming about it. Other teacher forums might have more info. Good luck!

zagubov

This was the post I was referring to.

xylophone

 £1,179.82

Is the above (£16, 882 -  {£4,895.31 + £4,929.69 +£5,878.00}) what your mother received this morning?

Has your mother already received the three amounts in curly brackets?

£4,895.31 + £4,929.69 = £9825.00  This is the arrears of pension.
Is the lump sum  ( £2997.15) plus the two interest amounts  (£1432.89) within the £5878?

If so, what accounts for the balance of  £1447.96?

Is there any evidence that tax has been deducted from any of these amounts?

Is your mother to receive £111 a month from henceforward?

Dox

zagubov said:

This was the post I was referring to.

Thanks - have tweaked to indicate that this is the norm in trust-based private sector schemes. TPS is neither of these!

Shimrod

justcheckin said:

Shimrod said:
Have you written to the TPS and asked them for a schedule showing how the arrears are apportioned across each of the years? I am a pensions trustee and we had to do a corrections exercise on a number of member pensions. For those with an arrears payments in the thousands, our pension administrators provided a schedule of pension/year for the pensioner to give to HMRC to ensure income tax was calculated correctly.

Thank you, I will do that. Is your understanding of the phrase 'payment on account' that they have already attributed the arrears to the intervening 14 years, or is that something she still needs to request via the Tax office?

I am not sure what 'Payment on Account' means in this case, and you would be best speaking to the TPS. They would not be able to apportion the arrears across the previous 14 tax years as they would not be aware of your mother's overall income in that period and therefore how much tax should be paid. They should be able to provide how the arrears payments are apportioned for you, and you will then need to contact your tax office and ask them to recalculate the overall tax due.

justcheckin

xylophone said:

 £1,179.82

Is the above (£16, 882 -  {£4,895.31 + £4,929.69 +£5,878.00}) what your mother received this morning?

Has your mother already received the three amounts in curly brackets?

She has already received: £4,895.31 + £4,929.69 as one payment of £9825.00. 

£4,895.31 + £4,929.69 = £9825.00  This is the arrears of pension.

Is the lump sum  ( £2997.15) plus the two interest amounts  (£1432.89) within the £5878?

She has also received: £1432.89 (the 2 interest payments I stated in my OP, as interest on the arrears and the lump sum, £790.38 and £642.51. She was told in the letter the interest was taxable)

If so, what accounts for the balance of  £1447.96? see below

Is there any evidence that tax has been deducted from any of these amounts?

Having used the calculator at listentotaxman I believe the 5878 is a taxation as if the £16882 were her month 1 pay, and that therefore it is eligible for tax at 34.8% (some in 20, 40 and 45%s respectively)

Is your mother to receive £111 a month from henceforward? see below

Thanks for your detailed response as ever. My responses are in bold and italics above.

I don't think the 1447 now applies with this extra detail given above?

Her future monthly payment (beginning 05/20 is stated as: £116.41 and using tax code 698N M1 (I believe this takes account of her state pension, and the fact that my dad now has an M code corresponding to her N code.

I hope this extra detail helps with any more information people can give us.

xylophone

See your other thread.
https://forums.moneysavingexpert.com/discussion/comment/77039046/#Comment_77039046