Civil Service Pension & Tax

Marcon

The totally unhelpful answer from me is "I don't know". It's extremely rare for someone to be granted ill health early retirement and then not get the pension put into payment as soon as possible - not sure I've ever seen it before so I have no practical experience to draw on. I do, in any case, have very limited knowledge of state benefits and how they interact with other income such as pensions (whether in payment or available for payment).

If your reason for not taking the pension from the date it was granted was to continue to qualify for means tested benefits, then it isn't going to be good news if HMRC etc join the dots. I have no idea whether they will do so regardless, or whether asking for your tax bill to be split into prior years will be the trigger. I hope someone else posting here will be better informed than I am; apologies for not being able to help at all.

GunJack

I think you may be very very lucky if you get way with just a tax bill, and not charged with benefit fraud. Sorry if this sounds a bit doom and gloom but you were supposed to take your ill health pension immediately and have less benefits..

Shadyocuk

Like Marcon I don't know what would trigger the can of worms actually being opened , but my understanding of the law is that if you take your backdated pension at any time prior to reaching SPA then the DWP can backdate your income and demmand repayment of the calculated overpaid benefits for each year, regardless of how you ask HMRC to treat it.

In your position I would calculate how much the worse case repayment would be (with ESA HB and CTB that could be substantial)  i.e go back each year and see how much benefits you would have been entitled to if you had recieved your pension that year and look at all other possible options to get you to SPA before claiming the deffered pension, as once you reach SPA you should be safe , but I am unsure how  backdating the income for tax purposes after reaching SPA would be seen by the DWP.

Whilst both the DWP and HMRC shall we say politely often have difficulties communicating within themselves , let alone between themselves , do you want to risk a potentially large bill arriving in a few years time if it was picked up or could you borrow money to get you through to SPA and pay it back with the lump sum?

I disagree that you could be done for benefit fraud as you can legaly defer pensions until reaching SPA

GunJack

Shadyocuk said:

I disagree that you could be done for benefit fraud as you can legaly defer pensions until reaching SPA

Whilst you can defer them until the NRA with no liability (not spa), a pension granted on ill health grounds is payable immediately so a different case.

The DWP can take into account any pension in deferrement once scheme NPA has been reached, i.e. the income due from it can and is taken into account for benefit purposes, 

 If I was the op I'd tread very very carefully...

Taylor2000

https://www.legislation.gov.uk/uksi/2008/794/regulation/106

Notional income does not include that from an occupational pension scheme where the claimant has not attained the qualifying age for state pension credit.

Catonthemoon

@GunJack Many thanks. A couple of points:
(1) Are you saying that there is a clear distinction between IHR pensions (usually granted before age 60), & ‘regular’ pensions (awarded at NRA of 60)? Surely both can be considered to be payable ‘immediately’, but if I’m understanding you correctly, you’re saying that the IHR one should not allow the option to defer whereas it’s perfectly ok to do so with NRA one? I spoke to the CS scheme administrators on a number of occasions & was told “you don’t have to claim it, in fact you can leave it deferred until age 75, but you must take it by then “. 

Just to be clear, there’s no wrong-doing taking place here; everything is above board.

(2) I was granted IHR at 50; I’m now 62. If, as you say the DWP take into account pension income deferred from NRA (60), does that mean they would only consider me having been overpaid for 2 years or from age 50 (12 years)? If the former, then not too bad but if the latter (worst case scenario ) the amount could be substantial. That is what I am fearing 😳.
Cotm

GunJack

I'd be very wary, and get any directions from mycsp in writing that they consider it legit to defer a IHR, from a couple of people I worked with they were told it's payable immediately and deferral was not possible.

How DWP see it may or may not be impacted by what mycsp say, if you can get some advice from a benefits specialist it may be a good idea. In any case, if a pension hits NRA then the perceived income can and has been taken into account by DWP even if its been deferred past NRA. It may be different for a DC scheme as there's no nra as such. 

Yours is a complex situation, as much specialist advice as you can get would be good.

Silvertabby

I can only draw on my LGPS background. In the cases of enhanced ill health retirement (any age) and redundancy (over 55) there are no deferral options available - the benefits must be paid straight away.  I appreciate that the LGPS and the CSPS do have some different regulations, but I'd be very surprised if ill health/redundancy deferrals are one of them. 

OP - is it possible that you were dismissed on the grounds of ill health, and so weren't awarded  any pension enhancements?  Instead, you would have had the choice of taking your benefits early (from 50 was a CSPS possibility back then) subject to early payment reductions, or deferring them until no/lesser reductions applied.

As for DWP taking an interest, that is probably still from SPA instead of an earlier scheme NRA.  Back when the NRA was 60 (for those who met the Rule of 85) it wasn't unknown for deferred members to refuse payment because their LGPS pension was less than their means tested State benefits.  But once they hit SPA that all changed and DWP would send us an avalanche of forms to complete, detailing each and every payment by month.  We were obliged by law to supply this information - but don't know what DWP actually did with it.  

Hoenir

Shadyocuk said:

Like Marcon I don't know what would trigger the can of worms actually being opened ,

Anybody that has many years of experience in a particular field. Will have come across something similar before.  HMRC have their Connect database to make immediate enquiries through in relation to a individual taxpayer's affairs..........

xylophone

OP - is it possible that you were dismissed on the grounds of ill health, and so weren't awarded  any pension enhancements?  Instead, you would have had the choice of taking your benefits early (from 50 was a CSPS possibility back then) subject to early payment reductions, or deferring them until no/lesser reductions applied.

This doesn't seem to fit with this?

I was retired from the Civil Service on the grounds of ill health in 2013 (I was in the Classic Scheme). Due to circumstances, I didn’t claim it at the time; I am now looking at doing so. My annual pension will be 12k. MyCSP have confirmed that it will be back-dated (ie 12k x 12 years = £144000).