Pension Redress and Tax

PH163

Hi. Has anyone had a successful pension claim against financial advice to leave a defined benefit pension to only then find the redress is classed as income and not compensation and so have been left with a 45% tax bill and having to repay child benefits etc...which then leaves the compensation no-where near the original redress calculation.

dunstonh

Hi. Has anyone had a successful pension claim against financial advice to leave a defined benefit pension to only then find the redress is classed as income and not compensation and so have been left with a 45% tax bill and having to repay child benefits etc

As pensions are taxable, if you were to receive the money without tax deducted it would give you a higher figure than you are entitled to.  Tax should be taken into account in the redress calculation but only the excess tax and not the tax that would be expected over the term

PH163

Thank you. Agree we should pay tax but redress only has to apply notional 20%  and then because we get it all in one year then the higher tax bracket applies. It seems unfair and wondered what had happened to others or if there is any way to claim the tax back because if it were pension as intended then we wouldn’t be having it in one year and loose so much to tax. 

dunstonh

I seem to recall from past threads that additional tax that would not normally have been payable is meant to be reflected in the gross redress figure.  Although often you have to go back to the firm and point it out to them as they dont know your tax position.

PH163

We have an offer and have 30 days to accept-4 days lost confirming tax position with HMRC. The offer is after tax £200k for what should have been £500k pot. Company won’t add tax in and state to go FSO if unhappy but there website states max payout £150k as this complaint started in 2018. Yes it’s taken a long time. The tax just doesn’t seem to put us anywhere near where we should be, they won’t change the offer and we think might not get near that with FSO. Do you know what level of redress the FSO can award and if that £150k includes tax or is then taxable?

zubeydoo6

just wondering how you went on with this and the tax situation as im in a similar position. tia

lincroft1710

zubeydoo6 said:

just wondering how you went on with this and the tax situation as im in a similar position. tia

As the poster was last active on the forum in November 2020, it's doubtful you'll get a reply