Military widow’s pension CPI increase?

pjs493

I’m in receipt of a pension due to my husband dying in Service last year. My understanding was that my pension (and those for our young children) would increase in line with the CPI from April. However, I received my remittance letter for all of us today and it is only increasing by 2.79%, not 6.7%. It has now pushed me over the tax threshold meaning I now actually get less than I did last tax year. Has anyone had any similar experiences?

Dazed_and_C0nfused

pjs493 said:

I’m in receipt of a pension due to my husband dying in Service last year. My understanding was that my pension (and those for our young children) would increase in line with the CPI from April. However, I received my remittance letter for all of us today and it is only increasing by 2.79%, not 6.7%. It has now pushed me over the tax threshold meaning I now actually get less than I did last tax year. Has anyone had any similar experiences?

The increase is only due from 8 April so the first payment in the new tax year will be a mix of the old and new rate.

The next payment will be all at the new rate.

And you would usually only get less if you were receiving more money from elsewhere, extra State Pension (which is paid in full without tax being deducted) is a common reason.

https://forcespensionsociety.org/2024/04/cpi-increase-announced-as-6-7

molerat

If you commenced receiving the pension after April 2023 then the increase is pro rated for the number of months to April 2024, 2.79% suggests you commenced receiving the pension towards the end of 2023.  Plus, as mentioned by D&C, the April payment is always lower than the May-Mar payment.

The published table shows 2.79% is due on payments commencing between 4mth 16d and 5mth 15d before April 8th 2024, between 24th Oct and 23 Nov. https://www.gov.uk/government/publications/public-service-pensions-increase-2024

xylophone

It does say on web page cited by D&C

Note that those receiving pensions for less than a year will receive a proportion of the full increase, depending on how many months your pension has been in payment during that year.

As the OP mentions that she has "young children" and that her late husband died in military service, it seems unlikely that SP is involved.

But she may well have taxable income over and above the widow's pension, perhaps from employment.

The Personal Allowance is frozen at £12,570.

She should check her Personal Tax Account.

https://www.gov.uk/personal-tax-account

pjs493

Dazed_and_C0nfused said:

pjs493 said:

I’m in receipt of a pension due to my husband dying in Service last year. My understanding was that my pension (and those for our young children) would increase in line with the CPI from April. However, I received my remittance letter for all of us today and it is only increasing by 2.79%, not 6.7%. It has now pushed me over the tax threshold meaning I now actually get less than I did last tax year. Has anyone had any similar experiences?

The increase is only due from 8 April so the first payment in the new tax year will be a mix of the old and new rate.

The next payment will be all at the new rate.

And you would usually only get less if you were receiving more money from elsewhere, extra State Pension (which is paid in full without tax being deducted) is a common reason.

https://forcespensionsociety.org/2024/04/cpi-increase-announced-as-6-7

My remittance gives me an annual figure and states it has increased from last year’s annual figure by 2.79%. I’m not of state pension age. I’m now getting less than I was previously because I was below the basic rate tax threshold. The 2.79% increase pushes me over the tax threshold so I’m getting less each month after tax is deducted. 

pjs493

xylophone said:

It does say on web page cited by D&C

Note that those receiving pensions for less than a year will receive a proportion of the full increase, depending on how many months your pension has been in payment during that year.

As the OP mentions that she has "young children" and that her late husband died in military service, it seems unlikely that SP is involved.

But she may well have taxable income over and above the widow's pension, perhaps from employment.

The Personal Allowance is frozen at £12,570.

She should check her Personal Tax Account.

https://www.gov.uk/personal-tax-account

Thanks, I have already done this and what is making the difference between what I was getting in a given month last year and this year is that I’ve been pushed over the basic rate tax threshold by the 2.79% increase so what I’ve paying in tax now means I get less into my account each month. 

pjs493

[Deleted User] said:

pjs493 said:

It has now pushed me over the tax threshold meaning I now actually get less than I did last tax year. Has anyone had any similar experiences?

I am not sure how you end up with less money?  That's not what normally what happens (unless you are talking about +/- £100,000 per year and are talking about childcare).

Because I’m now paying tax on what I receive. Last year I didn’t reach the basic rate tax threshold. With the 2.9% increase, I’m now paying tax. The 2.9% increase means a portion of my pension goes to HMRC as income tax so I’m getting a lower monthly amount into my bank account than I was before the annual increase. I was budgeting for the CPI rate and expecting a few quid more each month (after tax). Now I’m in a worse position than I was a month ago because I’m now paying tax. Meanwhile the cost of living is increasing. 

Since my husband died I’ve not been able to work because I have to provide full time childcare to our children who are both preschool age. If I worked I’d be paying more in childcare costs than I’d be earning. I don’t qualify for the new ‘free’ childcare rules and even when my eldest turns 3 I won’t be able to afford the top up fees local nurseries charge on top of the ‘free’ hours. 

pinnks

If you have been pushed above the tax threshold, then it is impossible to be worse off as only 20% of the amount in excess of the threshold goes in tax.  It is possible that your tax code needs to be looked at but even if that is the case, then unless you have other taxable income that is using up your personal allowance I cannot see how it is mathematically possible to receive less after tax than last year. 

As others have said, where you start to receive a public sector pension part way through the year, the first increase in the following year will not be the full CPI % as it will be apportioned to the months for which you have received the pension...

pjs493

To add more context, I’ve been on long term compassionate leave from my job since my husband died. I used to travel with work but can’t do that anymore with two young children. The cost of childcare for the day of my husband’s funeral was over £300. To go away for work for two or three nights would mean I’d pay more in childcare than I’d actually make when I take into account travel time, hotel costs, etc. I can only do so much of my job remotely. 

Due to my husband’s job I was working hybrid while he was alive. Most of the time I was working from home, but every couple of weeks I needed to travel to my usual place of work, spend a couple of nights in a hotel, and then come home. Travel and hotels were at my own expense because my employer was already giving me special dispensation so I could live with my husband (where his job took him) and work remotely most of the time. 

Meanwhile, my husband was also working mostly from home and would juggle work with the children while I was away. Likewise, he’d often have to travel with his job and I’d juggle childcare with working from home. That’s just not possible anymore. When there were two of us we could both work from home while juggling the children. Sometimes it would mean us both closing laptops on an afternoon and taking the children to the park to burn off some energy and then we’d do some work in the evenings once they were in bed. I can’t do full time childcare on my own and a full time demanding job from home on my own. Then it leaves the difficultly of needing to physically go into work every few weeks where childcare costs would just wipe out what I would be earning on top of what I was already paying out of my own pocket for travel and hotels. 

pinnks

My condolences for your loss but it does sound as though you have income in addition to the widow's pension from your own job.  If that is the case then you need to look at your total income for a year and the extent to which that total exceeds £12,570 to work out your overall tax bill - 20% of the excess. 

Bearing in mind that both your salary and the widow's pension will be subject to PAYE, you would need to look at your tax code for each source to see how much tax will be deducted from each.  It is, for instance, possible that last year sufficient of your personal allowance was used to cover the widow's pension in full, meaning it was paid with no tax deducted, and your salary will have born the brunt of your overall tax burden.  If your personal allowance is now coded fully against your salary, then you would be paying 20% tax on the full widow's pension.

I suggest you go to your Personal Tax Account online to see how your tax code is made up for each source of income. 

   

pjs493

pinnks said:

My condolences for your loss but it does sound as though you have income in addition to the widow's pension from your own job.  If that is the case then you need to look at your total income for a year and the extent to which that total exceeds £12,570 to work out your overall tax bill - 20% of the excess. 

Bearing in mind that both your salary and the widow's pension will be subject to PAYE, you would need to look at your tax code for each source to see how much tax will be deducted from each.  It is, for instance, possible that last year sufficient of your personal allowance was used to cover the widow's pension in full, meaning it was paid with no tax deducted, and your salary will have born the brunt of your overall tax burden.  If your personal allowance is now coded fully against your salary, then you would be paying 20% tax on the full widow's pension.

I suggest you go to your Personal Tax Account online to see how your tax code is made up for each source of income. 

   

Thank you for your condolences. It’s obviously an awful time and I just wish my husband was here every day. 

I’ve not had any income from my job since December 2022. I’ve been on unpaid leave since then. In other words I’m not actively employed, but my employer is keeping my job open for me for when I feel ready to return. 

In the 2023-24 tax year I didn’t receive any income from my job. My tax record is accurate and shows my pension as my only source of income. My tax code is correct.