Pension Lump sum and student loan repayment

oldfoodiegal

Hello, as a recent graduate and mature student, I will be eligible to take 25% of my pension as a lump sum in the next few months. I recently graduated and have completed a small amount of consultancy work for which I'll submit a self assessment tax return in January. My question (s) is, will my lump sum payment trigger me having to pay some of my student loan back ? Also the amount I've earned from the consultancy work is very small and under the £12,500 taxable threshold but I have read somewhere if you earn more than £2000 pa and complete SA then repayment of the student loan is at 9% of the total lump sum. I'm seeing only a small amount of information online and much of it conflicting. The answer may be to call Student Finance however I don't suppose this is a common scenario so I was hoping someone here might have some real life advice. Many thanks for reading.

Dazed_and_C0nfused

Is the 25% referring to the tax free lump sum 🤔

Or do you mean you are taking 25% of the value of your pension, 25% of which would be TFLS and 75% taxable income?

oldfoodiegal

Yes apologies- I could take 25% of my pension pot  and have a small amount of income which I’ll declare via SA. 

Dazed_and_C0nfused

oldfoodiegal said:

Yes apologies- I could take 25% of my pension pot  and have a small amount of income which I’ll declare via SA. 

That hasn't actually answered the question.

You could probably take 100% if you want.

Are you
A.  Taking a 25% TFLS or
B.  Taking 25% of the value, split 25% TFLS and 75% taxable income?  

oldfoodiegal

Sorry- yes it would be the TFLS of 25% of my private pension … I’ll leave the 75% as is untouched and still in the pension.

Dazed_and_C0nfused

You don't include the TFLS on a Self Assessment return so it cannot impact your student loan payments required under Self Assessment.

Marcon

oldfoodiegal said:

Hello, as a recent graduate and mature student, I will be eligible to take 25% of my pension as a lump sum in the next few months. I recently graduated and have completed a small amount of consultancy work for which I'll submit a self assessment tax return in January. My question (s) is, will my lump sum payment trigger me having to pay some of my student loan back ? Also the amount I've earned from the consultancy work is very small and under the £12,500 taxable threshold but I have read somewhere if you earn more than £2000 pa and complete SA then repayment of the student loan is at 9% of the total lump sum. I'm seeing only a small amount of information online and much of it conflicting. The answer may be to call Student Finance however I don't suppose this is a common scenario so I was hoping someone here might have some real life advice. Many thanks for reading.

I think you'll find it's an increasingly common scenario as holders of student loans get older. You also need to be aware of the terms of your particular loan - these have varied over the years depending on when the loan was first taken out. It's worth checking now so you are clear on what exactly would happen and when (and also what might legitimately be avoided or delayed, depending on the terms of your loan).

oldfoodiegal

Yes I’d come under a Plan 2 loan type meaning I’d need earnings of £26575 pa before repayments were due…. It’s the couple of comments about earnings over £2000 declared by SA that have thrown me though -these were on accountancy websites - as though the combination of collecting my 25% TFLS pension and the SA somehow trigger student loan repayments… I’ll keep digging ! Many thanks Marcon. 

oldfoodiegal

Dazed_and_C0nfused said:

You don't include the TFLS on a Self Assessment return so it cannot impact your student loan payments required under Self Assessment.

Thanks.... I thought this was the case... maybe the couple of comments I've seen about the earnings of > £2000 declared via SA weren't accurate. I suppose my situation is relatively uncommon so not much info widely available. Many thanks - your info is really helpful.

oldfoodiegal

Marcon said:

oldfoodiegal said:

Hello, as a recent graduate and mature student, I will be eligible to take 25% of my pension as a lump sum in the next few months. I recently graduated and have completed a small amount of consultancy work for which I'll submit a self assessment tax return in January. My question (s) is, will my lump sum payment trigger me having to pay some of my student loan back ? Also the amount I've earned from the consultancy work is very small and under the £12,500 taxable threshold but I have read somewhere if you earn more than £2000 pa and complete SA then repayment of the student loan is at 9% of the total lump sum. I'm seeing only a small amount of information online and much of it conflicting. The answer may be to call Student Finance however I don't suppose this is a common scenario so I was hoping someone here might have some real life advice. Many thanks for reading.

I think you'll find it's an increasingly common scenario as holders of student loans get older. You also need to be aware of the terms of your particular loan - these have varied over the years depending on when the loan was first taken out. It's worth checking now so you are clear on what exactly would happen and when (and also what might legitimately be avoided or delayed, depending on the terms of your loan).

Thank you Marcon... I have replied to you but further down... just learning that I should have clicked on 'quote'.... anyway yes I'm Plan 2 - I've read the small print and really it's only talking about earnings overall affecting when student loan repayments kick in... I'll keep digging around! Many thanks.