NHS Pension Questions.....

dosh1

I am currently working in the NHS and have done so for a number of years.

I have reached the pension age of 60 and am able to take my 1995 Pension but continue working (at present) paying into my 2008 pension for when I am 63 potentially.

I haven't taken my lump sum or monthly payments yet but plan to do so next next year.  I understand the pension will be backdated to when I was 60 (this year).

If I leave the NHS (say May next year) and potentially do not work for a few months and have time off and request the withdrawal of pension, would the backdated pay be based on a lower tax bracket as I will not be working or will it be backdated and based me working and my tax bracket at that time (it is the higher bracket).

I am trying to do the smartest thing for me so that I do not get lumped with even more tax at a higher rate?

My theory was if I am not working they work out the tax I pay on my backdated pension based on a lower bracket (as I am not working)?

Hope this isn't confusing.  Thanks

dosh1

I am currently working in the NHS and have done so for a number of years.

I have reached the pension age of 60 and am able to take my 1995 Pension but continue working (at present) paying into my 2008 pension for when I am 63 potentially.

I haven't taken my lump sum or monthly payments yet but plan to do so next next year.  I understand the pension will be backdated to when I was 60 (this year).

If I leave the NHS (say May next year) and potentially do not work for a few months and have time off and request the withdrawal of pension, would the backdated pay be based on a lower tax bracket as I will not be working or will it be backdated and based me working and my tax bracket at that time (it is the higher bracket).

I am trying to do the smartest thing for me so that I do not get lumped with even more tax at a higher rate?

My theory was if I am not working they work out the tax I pay on my backdated pension based on a lower bracket (as I am not working)?

Hope this isn't confusing.  Thanks

El_Torro

Your income (for example pension income) is considered based on the tax year you receive it. The fact that it's a back dated payment won't mean that the tax year is also back dated.

ali_bear

Like he says your tax is assessed over the tax year. I would be surprised if you are paying higher rate (40%) income tax on your pension.
What you want to make full use of is the personal allowance of just over 12 thousand each year on which you pay no tax. So you probably want to avoid having a tax year when your total taxable income is less than this. 

swindiff

Your 1995 pension won't be backdated or increased for taking it after the age of 60, so you should take it as soon as you are 60

https://faq.nhsbsa.nhs.uk/knowledgebase/article/KA-04594/en-us

Marcon

dosh1 said:

I am currently working in the NHS and have done so for a number of years.

I have reached the pension age of 60 and am able to take my 1995 Pension but continue working (at present) paying into my 2008 pension for when I am 63 potentially.

I haven't taken my lump sum or monthly payments yet but plan to do so next next year.  I understand the pension will be backdated to when I was 60 (this year).

If I leave the NHS (say May next year) and potentially do not work for a few months and have time off and request the withdrawal of pension, would the backdated pay be based on a lower tax bracket as I will not be working or will it be backdated and based me working and my tax bracket at that time (it is the higher bracket).

I am trying to do the smartest thing for me so that I do not get lumped with even more tax at a higher rate?

My theory was if I am not working they work out the tax I pay on my backdated pension based on a lower bracket (as I am not working)?

Hope this isn't confusing.  Thanks

You say 'do not work for a few months', which suggests you're planning to work again in the 2025-26 tax year after having a few months off? If so, it might not make any difference, since your tax will ultimately be based on all your income for that tax year (salary, pension and any other potentially taxable income such as dividends or interest on savings).

GrubbyGirl_2

Why do you think the pension will be backdated to your 60th birthday?  Your pension will be paid from the date you claim it so better get moving!