Help re Pension, Tax etc

penguin10

Hi
I wonder can anyone help please?
I am trying to assist my colleague re completion of NHS pension forms (Northern Ireland) and can't find an answer elsewhere.
She is a current member of NHS scheme and her pension will be in the region of £10,000 per year plus earnings of around £20,000 from mid 2025. No other income or earnings.
in 2021 she did get a lump sum from Std Life having paid into it some years ago as AVCs (was originally Equitable Life she thinks).
Lump sum of around £13,000 was paid and 20% tax deducted so she actually got around £9,000 net paid to her.  This was not a small pot and was the plan value, accessed flexibly.
She does have a page from them called 'notification flexibly accessing your pension rights'.
In completing NHS pension forms it now asks:


I guess the answer here will be YES (even though its not no longer live and all money due has been paid to her? 



Totally confused about this section. Is it as simple as 5.1 is NO and 5.6 is also NO?

squirrelpie

You don't say what 5.6 is, so it's difficult to answer?

penguin10

squirrelpie said:

You don't say what 5.6 is, so it's difficult to answer?

 Thank you for replying and sorry I didn't realise 5.6 was cut off.  I have edited the post accordingly  

DRS1

When she took the benefits from Standard Life she ought to have got a piece of paper saying how much of the Lifetime Allowance she had used up.  It may just be a line in a letter saying "This is how much we have paid you" - it would usually express it as a percentage.
The answer to 5.6 is probably No since she has been clocking up benefits under a pension scheme.  I think (though it may need checking) that if you get a LTA protection certificate one condition is that you do not contribute to a pension scheme or accrue benefits under a pension scheme after you got the certificate.  There is more here

Protect your pension lifetime allowance - GOV.UK

penguin10

Thank you - this is what she got from Std Life and sent it to Pension Dept as it stated on the letter. No mention of %.  the only other letter was just noting how much they paid her and into the specific bank account.

DRS1

Well now I am not sure what to do about 5.1.  If you can ask the admin people what to do that would be best - explain that she had this other pension but doesn't have it now because she took all the benefits back in 2021.  Say it looks like the answer should be NO and you should then go to 5.6 - ignoring the bits in between. and ask if that is how the form is meant to be filled in.  Or do you have to say YES to 5.1 because she did have another pension even though it is gone now?
Section 5 is really about any lump sum paid from the NHS pension scheme and testing whether it is within the Lump Sum Allowance.  That allowance covers most other lump sums (the tax free variety) from pensions so what they should be trying to find out is if the member already had eg a £250k tax free lump sum from another pension which will restrict how much tax free lump sum they can give her now.  What I am having doubts about is whether the benefits she took in 2021 counted against the old Lifetime Allowance.  I would have expected something in the paperwork if that was the case.  But if it does count then I would have expected section 5 to be designed to ferret that out.  But it looks like there may be a gap you can drive a coach and horses through.
Sorry if I switch between Lifetime Allowance and Lump Sum Allowance but when they abolished the old Lifetime Allowance they introduced the Lump Sum Allowance to restrict how much tax free lump sum you could get from your pension.  Broadly speaking if you put your pension into drawdown in 2021 and used up  10% of the lifetime allowance then you would be treated as having used up 10% of the Lump Sum Allowance so you only have 90% of it left for any tax free lump sum you may get paid now.  Since the Lump Sum Allowance is over £250K it is probably not going to affect your colleague.

penguin10

Thanks - I will tell her to ring Pensions Dept and try to explain.
My knowledge is very limited however I would sway towards thinking no matter what, her pensions won't ever reach any of these quoted allowances.
Its all very complicated thats all I know

penguin10

An update:
A phone call to pensions dept confirmed to say no to 4.1 (have you ever had AVCs etc).
5.1 is also no (any arrangements outside of NHS)
5.6 - again no (valid LTA cert)
All is now sorted
Thanks