Civil Service Pension & Tax

Silvertabby

My answers in bold ..........

Catonthemoon said:

@Silvertabby @DE_612183  After several assessments by the Scheme Medical Advisers, I was eventually granted IHR. This is different to being dismissed on the grounds of ‘medical inefficiency’ (usually because of lengthy absences due to health reasons).

Shortly after, I received the claim forms. There weren’t any boxes to tick ie ‘I wish to claim now’ or ‘ I wish to defer’…the forms just weren’t returned!

Your initial application for ill health retirement was your application for immediate pension benefits.  The forms you received would have just asked you for your standard pension/reduced pension plus commuted tax free lump sum options, and your bank details.  MyCSP should have chased the forms, as the scheme rules do state that ill health benefits must be paid immediately.   Did you receive any phone calls or chaser letters? 

Several years later, I contacted MyCSP to find out the state of play with my pension. I was advised that (a) it would be back-dated & (b) I didn’t have to take it now; I could leave it unclaimed until 75 (at the latest).

A simple matter of getting the right answer to the wrong question?  When you rang MyCSP did you tell the person you spoke to that you had been awarded an immediate, enhanced, ill health pension some years ago?  If not, then it would never have occurred to the administrator that they were dealing with anything but normal deferred benefits.  

Knowing there was no pressure, I decided to leave it until the time was right for me.

When I lost the job, I had applied for ESA & HB as I had no other sources of income or savings. Shortly after, my IHR application was successful. Was I required to notify the DWP & the Local Authority? I always had previously ie when savings exceeded £6k, but, in these circs, no payments have actually gone into my a/c.

I'm not an expert in State benefits, but suspect that yes, you should have told DWP etc that you had been awarded an immediate ill health pension.  Your means tested benefits would then have been adjusted to account for this income.
 
When I posed the question about my tax, it was only then that the whole business of notional income, potential overpayments/recovery, was brought to my attention. 

I’ve spent a lot time trawling through HMRC/DWP manuals together with viewing the advice/comments on various threads on here. 

Conclusion: it all seems so confusing & complex; contradictory interpretations of the rules & regs etc; honestly, it would give a woodpecker a headache!!

The $64000 question is : where does all of this leave me?

I doubt that many prior such cases exist, if any, so I'm afraid that you are unlikely to find an definite answer on these boards.  Can only suggest that you take it a step at a time starting with claiming your arrears, sorting the tax out, and then seeing what DWP have to say about your means tested benefits.  

Catonthemoon

@DE_612183 (re: your post of 23 June 4.20)

I think I will approach this by waiting to see how MyCSP will deal with this situation (whenever that may be), before raising any complaints with either them or the Ombudsman. If it causes me to be disadvantaged financially, then I would consider those options, but, it goes without saying, I would like to have the best possible outcome.  Cotm

Marcon

DE_612183 said:

Looking at all that I think you have been mis-informed by MyCSP and I'd be looking to raise a complain with them about the advice you have been given and the way your pension has been administered - as others have said you should have been paid out from day 1 whether you wanted to or not - this has now led to a state where when you are paid you you could find yourself substantially out of pocket through no fault of your own.

You could also try the pension ombudsman if you get no joy with MyCSP - which as they are losing the contract in about 3 months time I wouldn't' hold out much hope of any joy from them....

A complaint about what, exactly? 

There is no option under the Regs to defer an ill health pension; all the forms, information etc make it clear that payment is 'immediate'.

You can't force someone to start taking their pension - for starters, you need to know their bank details. The old-fashioned alternative of putting the cheque in the post doesn't work either; the recipient can't be forced to cash it. There is also the matter of how much tax free cash they wish to take - in this case it's an automatic 3 x annual pension, with the option to increase that lump sum by giving up some of the regular pension income.

The idea that the current mess is through 'no fault of [their] own' is absurd. They deliberately chose not to return the forms in order to delay payment, with the objective of claiming state benefits to which they would not otherwise be entitled.

At no point do they appear to have felt any need to check the position with DWP or their local council, despite the fact there had been a clear 'change of circumstance' (being granted an ill health early retirement pension, payable immediately - see https://www.gov.uk/report-benefits-change-circumstances which includes a requirement to report a change to 'your pension, savings, investments or property') so they have to live with the consequences of their own actions, whatever those consequences might be.  It is the fact the pension would be backdated that makes it abundantly clear that the entitlement arose at the date IH retirement was confirmed. 

If a member chooses to delay the provision of essential information, and asks how long they can go on delaying (not the same thing as deferring), the only possible answer would surely be the general one that 75 is the latest date for claiming Classic benefits (although again, MyCSP can't make a member do so once they hit 75) + confirmation that payment would be backdated to when OP's ill health claim was accepted.

Two hopelessly complex worlds have collided - and I for one have no idea what the fallout will be. 

Catonthemoon

Marcon said:

molerat said:

Catonthemoon said:

............................

The $64000 question is : where does all of this leave me?

Needing to seek the views of a Citizens Advice or Law Centre benefits specialist

I think it might need to be even more 'specialist'. OP, try sending a message to Paul Treloar (https://www.rightsnet.org.uk/Forums/viewthread/20734/#97048 - you'll need to sign up for a free account) and also Steve Webb (https://www.thisismoney.co.uk/money/pensions/article-14114353/Taking-NHS-pension-Universal-Credit.html).

I'd be tempted to simply send them the link to this thread and add a covering note that you are struggling to understand the position where someone has been granted an ill health early retirement pension from the Civil Service Classic Pension Scheme but not taken it immediately, and wonder if they could shed any light on how this impacts on (a) the state benefits you have been claiming and (b) the income tax treatment of the backdated ill health pension payment?

If they want any more information they'll ask you for it, so I wouldn't spend ages fretting over what to include in your initial approach. 

Thank you for this. I shall follow your advice & run this past Paul Treloar. Hopefully, he’ll be able to offer some guidance on the best way to proceed and/or where I stand. Cotm