COPE

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xylophone said:

I don't see the problem.

Your state pension will be paid without the deduction of tax.

The tax you are liable to pay will be deducted from the TPS pension.

It isn't a problem, just psychologically it will hurt to pay even more tax on the TPS pension, even though the total tax and the nett total money will be the same. 

molerat said:

They generally only split codes if either income stream will not use the whole allowance, that is the only time mine have been split - I went from whole / BR to split and back to whole / BR. 

I've no idea why they split it, neither had they, they were happy enough to remove the split.

Albermarle

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Albermarle said:

You mention 'personal pension' . Is this the pension that was funded by opting out of SERPS?

If so it will be a pot of money in a DC pension . In this case there is no fixed income, it depends on the size of the pot and how you choose to take it. (It may be a lot more or less than the COPE amount, as this was just an estimate 6 years ago)  In which case I do not understand this comment . 

My personal pension just hits the threshold, 

It sounds like a pension with a fixed income? Do you have the SERPS related personal pension and another pension as well. It is not very clear .

I have a teachers pension, which started when I got to 60, the state pension doesn't start for years yet.  I managed to get enough service to make a reasonable pension, that just passes the income tax threshold so I pay tax on it.

When I worked part time HMRC wanted to split the tax allowance so I had two bizarre tax codes. I got them to put the entire allowance on the TP, and give me a zero code for any other work, as it made more sense to me.

I now understand that they will reduce my tax allowance by the amount of the state pension and not tax the state pension, so I will pay the same tax, just that it will hurt more as it will reduce the personal pension payout by 20% of my state pension.  I'd prefer the allowance on my TP, and zero on the state pension like before.

So presumably there is a  SERPS related pension pot as well ?  Are you  going to start taking it later? Normally that will be 25% tax free and the rest taxable , if you withdraw from it.

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Albermarle said:

So presumably there is a  SERPS related pension pot as well ?  Are you  going to start taking it later? Normally that will be 25% tax free and the rest taxable , if you withdraw from it.

I thought the SERPS money has gone buying credits when They did The Big Calculation back in 2016 to decide where I was starting on the New Improved Single State Pension?

I did get a tax free cash lump sum at the start of the TPS pension, I took the minimum to keep the pension up (so I pay tax). Advice was to increase the lump sum until the remaining pension fell below the tax threshold, but I could only win that way if I die young, I'm hoping to play the long game

xylophone

So presumably there is a  SERPS related pension pot as well ?  Are you  going to start taking it later? Normally that will be 25% tax free and the rest taxable , if you withdraw from it.

Is there some confusion here?  When the OP writes of his "personal pension" does he actually mean his TPS pension?

The TPS pension is paid to him personally but is not a personal pension as generally understood - it is a Defined Benefit occupational pension.

Linton

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Albermarle said:

So presumably there is a  SERPS related pension pot as well ?  Are you  going to start taking it later? Normally that will be 25% tax free and the rest taxable , if you withdraw from it.

I thought the SERPS money has gone buying credits when They did The Big Calculation back in 2016 to decide where I was starting on the New Improved Single State Pension?

I did get a tax free cash lump sum at the start of the TPS pension, I took the minimum to keep the pension up (so I pay tax). Advice was to increase the lump sum until the remaining pension fell below the tax threshold, but I could only win that way if I die young, I'm hoping to play the long game

The SERPs scheme changed several times, but for some of the time (IIRC) if you were contracted out rather than you paying less NI, the money was placed in a personal pension with a guarantee that you would get at least what you would have received under SERPs.

Albermarle

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Albermarle said:

So presumably there is a  SERPS related pension pot as well ?  Are you  going to start taking it later? Normally that will be 25% tax free and the rest taxable , if you withdraw from it.

I thought the SERPS money has gone buying credits when They did The Big Calculation back in 2016 to decide where I was starting on the New Improved Single State Pension?

I did get a tax free cash lump sum at the start of the TPS pension, I took the minimum to keep the pension up (so I pay tax). Advice was to increase the lump sum until the remaining pension fell below the tax threshold, but I could only win that way if I die young, I'm hoping to play the long game

I think somewhere you have another pension pot but I am not an expert.
In my experience I was contracted out of SERPS . Each year the government paid into a personal pension pot in my name ( in fact was originally in the employer name but effectively was mine) I received an update each year from the pension provider about what had been received and how the investments were performing.
This was all completely separate from any other pension and the only contributions were these rebates because I had given up some rights to SERPS. Although I long since contracted back into SERPS, I still have this pension pot .

Before you get too excited , better wait for other comments, in case my experience was not typical and/or there were alternative ways of opting out of SERPS.

Albermarle

Linton said:

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Albermarle said:

So presumably there is a  SERPS related pension pot as well ?  Are you  going to start taking it later? Normally that will be 25% tax free and the rest taxable , if you withdraw from it.

I thought the SERPS money has gone buying credits when They did The Big Calculation back in 2016 to decide where I was starting on the New Improved Single State Pension?

I did get a tax free cash lump sum at the start of the TPS pension, I took the minimum to keep the pension up (so I pay tax). Advice was to increase the lump sum until the remaining pension fell below the tax threshold, but I could only win that way if I die young, I'm hoping to play the long game

The SERPs scheme changed several times, but for some of the time (IIRC) if you were contracted out rather than you paying less NI, the money was placed in a personal pension with a guarantee that you would get at least what you would have received under SERPs.

I do not think there were any guarantees, but in theory you should have got more, depending on investment performance.

Albermarle

xylophone said:

So presumably there is a  SERPS related pension pot as well ?  Are you  going to start taking it later? Normally that will be 25% tax free and the rest taxable , if you withdraw from it.

Is there some confusion here?  When the OP writes of his "personal pension" does he actually mean his TPS pension?

The TPS pension is paid to him personally but is not a personal pension as generally understood - it is a Defined Benefit occupational pension.

Yes that is the confusion I am trying to clarify . The OP has a TPS and a state pension , but the personal pension you would normally associate with SERPS seems to be invisible.

xylophone

I thought the SERPS money has gone buying credits 

Buying credits?

In 1978, the government of the day introduced the State Earnings Related Pension Scheme.

Occupational Pension Schemes were permitted to "contract out" of SERPS provided that they provided members with a pension at least as great as they would have accrued had they remained "contracted in" - this was the "Guaranteed Minimum Pension".

In 1997, the GMP  system ended  in favour of  a requirement for the scheme pension to meet a standard known as the "Reference Scheme Test".

While SERPS was in existence, those who were contracted out of it did not build up any state pension  additional to the Basic State Pension.

This is different from what happened under S2P when it was possible for low to moderate earners to accrue some additional state pension even though contracted out.

Contracting out ended for Defined Benefit Schemes from 6. 4. 16 with the introduction of the new state pension.

The government had to decide how to manage the transition from old SP to new SP taking account of contracted out/contracted in status.

The system that they came up with was to consider what each person would have received under the old and new systems, making the "starting amount" for new SP the higher of the two.

Have a look at this

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/210299/single-tier-valuation-contracting-out.pdf

The actual BSP on 6/4/16 was £119. 30 and the NSP £155.65.

For "foundation amount" read "starting amount" and for "Rebate Derived amount" read COPE.

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Sorry, when I said personal pension I was referring to my TPS pension.  (Because it is my own personal pension wot I paid into )

I was in SERPS for 10 or 11 years before I became a teacher, I thought this is lost to the state pension which has been enhanced somehow to that odd figure 11p short of full, despite nigh on 30 years contracted out.