NHS Pension

2biscuitsshort

I took early retirement from my NHS role approximately a year before my retirement age. I reached state pension age at end of 2023. After having to fill in forms and provide much evidence to prove my identity,  I am still struggling to get my NHS pension. I have now received yet another form requesting if I want a Trivial Commutation Lump Sum Statement and I haven’t got a clue what this is or how it affects my pension!! Anyone had experience of this? I’ve read all the information supplied with the form and still haven’t got a clue what it means.

DE_612183

I think it means you are trying to take your entire pension out in one lump sum - is this what you want?

2biscuitsshort

I would but not sure of how much tax I would have to pay on the lump sum 

DE_612183

First 25% is tax free - the rest will then depend on what other income you have for the year and what your tax code is and how much you are taking.

Silvertabby

It means that the notional value of your NHS benefits amount to less than £30K, so you can't have been in the NHS pension scheme for very long.

Trivial commutation is the taking of a DB pension in the form of a one-off lump sum, of which 25% is tax free.  But - and this is a really big but - you can only do this if the total value of ALL your pensions (excluding the State pension) is under £30K.

How much have they offered you (round pounds will do) and what other pensions (apart from the State pension) do you have?


Note:  By notional value, I don't mean your annual pension amounts.  As a very rough guide, multiply your annual pension amounts (excluding the State pension) by 20.

hugheskevi

2biscuitsshort said:

I took early retirement from my NHS role approximately a year before my retirement age. I reached state pension age at end of 2023. 

To clarify, did you request for your NHS pension to be put into payment when you left your NHS role, or did you leave the pension deferred?

Also, did you have 2+ years of service in the NHS during which time you were a member of the pension scheme?

2biscuitsshort said:

I have now received yet another form requesting if I want a Trivial Commutation Lump Sum Statement 

Do you have any other personal or occupational pensions in addition to your NHS pension?

2biscuitsshort said:

I haven’t got a clue what this is or how it affects my pension!!

......

I would but not sure of how much tax I would have to pay on the lump sum 

If the capital value of all of your personal and private pensions is under £30,000 then you can choose to receive one or more (or all) of your personal and occupational pensions as a lump sum within a 12 month period.

Whatever you choose to receive as a Trivial Commutation will be paid with 25% of the amount tax-free and the remaining 75% being added to your taxable income for the tax year in which it is received.

2biscuitsshort

Thanks- they’ve offered £20k and I’ve no other private pension or earnings 

Silvertabby

2biscuitsshort said:

Thanks- they’ve offered £20k and I’ve no other private pension or earnings 

Then you would receive £5K tax free, with the other £15K being classed as your taxable earnings.  Note that NHS pensions won't have your tax code to work with, so they may take too much tax - but that will be sorted out in due course.

Just one point - you say that you don't have any other privste pensions, but do you have any other public sector pensions?  Even if you haven't yet claimed them?  

Moonwolf

Is the £30k limit on Trivial Commutation always true?  I have £73.99 a year in the 2008 section which would be less than £1500.  According to the NHS Pension guidance.

"Where the total value of a trivially commuted pension excluding any pension commencement lump sum does not exceed £10,000, the member may elect at awarding stage to trivially commute their pension. This is regardless of whether the capital value of all Trivial commutation factsheet (01.2019) V6 2 their pension benefits, including those outside the NHS Pension Scheme, is more than the commutation limit of £30,000."

I assume that for very small sums it is easier admin for everyone if they are commuted.  The costs of a £6 per month payroll has to be almost more than the benefit.

molerat

£5K will be tax free and £15K subject to tax so if you have the full state pension of £11.5K tax will be due on around £14K of that so around £2.8K tax.  The actual tax deduction at source may be different to that due to tax regulations leaving you to either reclaim or pay some extra tax. (back of a fag packet calculation as it all depends on your personal circumstances)

Marcon

Moonwolf said:

Is the £30k limit on Trivial Commutation always true?  I have £73.99 a year in the 2008 section which would be less than £1500.  According to the NHS Pension guidance.

"Where the total value of a trivially commuted pension excluding any pension commencement lump sum does not exceed £10,000, the member may elect at awarding stage to trivially commute their pension. This is regardless of whether the capital value of all Trivial commutation factsheet (01.2019) V6 2 their pension benefits, including those outside the NHS Pension Scheme, is more than the commutation limit of £30,000."

I assume that for very small sums it is easier admin for everyone if they are commuted.  The costs of a £6 per month payroll has to be almost more than the benefit.

No. See https://www.nhsbsa.nhs.uk/sites/default/files/2019-01/Trivial%20commutation%20factsheet%20%2801.2019%29%20V6.pdf