Teacher's Pensions and widow's pension

Yorkie1

xylophone said:

Your mother has only just noticed that she hasn't received her pension for over a year?

I know!!!

She was still receiving a smaller amount on a different TP pension reference number, and had other income from the state pension, a tiny other pension and a couple of annuities, so hadn't really noticed that her income had actually dropped ... she is 81, and pretty clued up usually, TBH.

I was staying with her for a couple of days this week, and took the opportunity to go through 2 years' current account and credit card statements to look at what she had coming in and out, and spotted it at that point!

xylophone

https://www.teacherspensions.co.uk/public/contact-us/member-contact-us.aspx

Anything here to help re contacting TPS?

Yorkie1

xylophone said:

https://www.teacherspensions.co.uk/public/contact-us/member-contact-us.aspx

Anything here to help re contacting TPS?

Thanks xylophone - we'd tried ringing but the wait was too long. Although she does basic tech well, I think getting her signed up onto the portal, and expecting her to liaise with them through that, was probably a step a bit too far

I don't remember seeing anything about contracting out on any recent pensions letters, but can get her to look.

Yorkie1

Silvertabby said:

Keep_pedalling said:

Were they married? If they were her pension should be for life regardless is she remarried or not. 

Unfortunately, it would appear not in this case.  My understanding is that a TPS widow's pension only remains in payment after re-marriage/co-habitation if the scheme member had pensionable service after 1 Jan 2007.

So, TPS not receiving confirmation that OP's mum was still eligible would certainly have resulted in the stoppage of payments - but I would have expected TPS to have followed that up with an investigation and recovery of any overpaid benefits.

Yes, assuming that OP's mum remains eligible, the pension should be re-instated and full arrears paid. 

Thanks Silvertabby - there was no recovery of overpayment or subsequent investigation, but you've confirmed my thoughts about why the pension payments may have stopped.
Glad to hear that once this is all sorted out, the pension should be reinstated / arrears paid.

She's had no relationships of any sort since Dad died 7 years ago.

xylophone

If your mother has a widow's pension from TPS and your father was a member of TPS between 1978 and 1997 then her state pension letter should show a COD.

https://forums.moneysavingexpert.com/discussion/6338773/inheritance-of-additional-state-pension

https://www.thisismoney.co.uk/money/pensions/article-4739846/Why-state-pension-reduced-husband-died.html

Yorkie1

Just to update in case anyone else comes across this thread.

Mum posted the letter to Teachers' Pensions on 30 October, recorded delivery.

On 7 November, TP wrote back to her to say that they had indeed received her form last June but had then wrongly suspended the pension in July.

They will reinstate the pension payment, and she should receive the arrears in the next 7 - 10 days.

From my reckoning, there's a possibility that the back payment of 15 months' pension may tip her over into higher rate tax for this tax year, but I suspect this is likely to be a complication too far for her to unravel.

Thanks all for your input.

xylophone

From my reckoning, there's a possibility that the back payment of 15 months' pension may tip her over into higher rate tax for this tax year, but I suspect this is likely to be a complication too far for her to unravel.

See

https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim75020

If a pension provider discovers a long-standing underpayment of pension, the underpayment is calculated and paid in a single sum. Where the provider is required to operate PAYE, they operate it on the lump sum arising which may give rise to higher rate liability for a pensioner who is usually a basic rate taxpayer. In this situation, the pensioner should contact HMRC at the end of the tax year in which the arrears were paid and supply a schedule showing the years to which underpayments are attributable (on the accrual basis), asking for the payments to be related back to the relevant years. HMRC will spread the payments back over the relevant years and recalculate liability. Underpayments in the earlier years may be set-off against the resulting overpayment in the year of the lump sum payment.

Yorkie1

Thanks so much @xylophone

Really useful to know if the situation does arise. 

Yorkie1

I'd value any thoughts about the current tax position now that Mum has received various paperwork from TP and from HMRC (tax codes). It seems clear that they are taxing her at higher rate this year.

I'm not sure whether we need to do anything with regard to HMRC now, or wait until the end of the tax year, or just let them catch up in due course? I'm also not confident in how to apportion the amounts on an accruals basis for the two tax years as advised in the link above.

Mum has a total of 5 income streams: State pension, her own TP income, my late Dad's TP (widows) income, a local council pension payment, and an annuity.

Tax year 2022/23
P60 for her own TP income 2022/23 = Pensionable pay £4142, tax £550, final tax code 138L
P60 for the widow's TP income 2022/23 = Pensionable pay £5249 [would have been about £21K if paid for the full year], tax £1050, final tax code BR
(I don't have one to hand for the SP or the annuity)

Feb 2023: tax code notice for 2023/24 = Total tax free amount £13 (personal allowance £12570, less SP £12557), used as follows:

• 1T for her own TP
• BR for each of her annuity and council
• (TP widows not listed as it had temporarily stopped in July 2022)

7 November 2023: TP confirm that they had wrongly stopped the payments of the TP widows pension since July 2022, and that they would reinstate the arrears within the next couple of weeks.

November 2023 Mum informs me that she has received about £23,300 into her bank account - doubtless, the arrears.

TP monthly payment advice for the TP widows ref November 2023:

• Gross payment £31K
• Tax £6200
• Other deductions £23,300 [I think this is the arrears]
• Net £1530 [I think this reflects the new monthly pension payment

26 November 2023: revised tax code notice for 2023/24 = 

• Personal allowance £12570, less SP £12557, less Adjustment to Rate Bands £15345 (note 3). Therefore "£15332 to be added to your wages, salary or pension"
• For her own TP: - £15332 is added to this pension, tax code K1532 X replaces 1T
• BR for each of her annuity, council and TP widows (note 5)
• This totals your tax-free amount £-15332
• Estimated tax you owe £2046 (note 7)

(Note 3 - we have added this amount as you have more than one pension and we estimate some of your income is taxable at a higher rate)
(Note 5 - Tax code ending in X shows we will review the tax you have paid after 5 April)
(Note 7 - Due to an in year adjustment to your tax code(s), we think that you will owe HMRC £2060.40. We will therefore include an adjustment to reduce your tax-free allowance to collect [it] in equal instalments by increasing the tax deducted from your pension from 6 April 2024.)

27 Nov 2023: letters from TP:

• Notified of new tax code for her own TP, of K1532 (I think it also has M1 after those digits)
• Notified of new tax code for the TP widows, of BR

xylophone

I'm also not confident in how to apportion the amounts on an accruals basis for the two tax years as advised in the link above.

See

https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim75020

Before approaching HMRC, get together all information concerning your mother's income and liability for tax in the tax year 2022-23.

There should be P60s for the TPS pensions, the LGPS pension and the annuity.

You can check her state pension situation from the Increase in Benefit letter she would have received in around  March 2022 concerning payments for 22/23.

Because the TPS Widow's Pension  did not stop until July, you should know from her April/May/June receipts how much the pension should have been - presumably there was a letter from TPS in April or thereabouts showing the pension increase for the year and also a payslip for the first month of the tax year showing the gross/net/tax code?

Have TPS now provided a statement showing the gross monthly for the current tax year?