Civil Service Pension & Tax

xylophone

Yes. 35 full years (ie max).

For somebody in your situation (SPA post 6/4/16) 35 years is not the whole of the story.

You were an active member of a contracted out occupational pension scheme for some years between 6/4/78 and 2013 when you left work and became....not exactly sure what ....

At 6/4/16, your "starting amount" of NSP was the higher of

OLD RULES

NIQY/3O (max) x Full Basic SP (£119.30) + (Additional State Pension - Deduction for Contracting Out).





NEW RULES

(NIQY/35 (max) x Full NSP {£155.65}) - Contracted Out Pension Equivalent

See ("Foundation Amount" = Starting Amount.  "Rebate Derived Amount" = COPE.)

https://assets.publishing.service.gov.uk/media/5a7a21fd40f0b66a2fc00201/single-tier-pension-fact-sheet.pdf

https://assets.publishing.service.gov.uk/media/5a7c2e95e5274a25a9140fdc/single-tier-valuation-contracting-out.pdf

You were not working after some point in 2013 so may well have needed credits to bring you up to full NSP.

I don't know what your situation was in respect of these credits or (if you received them) what effect your non declaration of the entitlement to the IHR pension  may have - possibly none, another matter to clarify woth the powers that be.

Catonthemoon

@xylophone  You were not working after some point in 2013 so may well have needed credits to bring you up to full NSP.

I don't know what your situation was in respect of these credits or (if you received them) what effect your non declaration of the entitlement to the IHR pension  may have - possibly none, another matter to clarify woth the powers that be.

Thank you for the explanation of the old & the new. I checked my forecast online - 35 full years;  23 from employment, 12 from NI credits giving a SP of £223 pw. Your last sentence… another thing to be concerned about 🤔

Catonthemoon

xylophone said:

Some time after the IHR was approved, I decided to move.

 Then you were at the old address (and receiving benefits) for some time after the IHR was approved? You say that you had received 

forms for completion.

These were forms requiring your bank details and your choice on commutation of part of your annual pension?  As I understand it from 

preceding posts, you were  entitled to an automatic 3 x salary and the possibility of a higher lump sum via commutation?

 

I don't quite follow why you didn't return the forms at this time. Presumably the lump sum would have eased your situation? And after it was 

spent/down to £6000,  if the pension was modest, you may have been entitled to help with rent and CT? The DWP may ask the question.

 I suspect a lot of my mail went astray during this period, which may have included pension related paperwork.

It is possible that the post was returned unopened to the Administrator - I don't know what happens at that end in such a case.

Certainly there can be no payments until the forms have been received and actioned.

This was a real eye opener as I hadn’t even contemplated that what I was doing/not doing was ‘against the rules’.

As I understand it, you cannot choose to defer an ill health pension. You  simply chose not to receive it by not returning the forms.

I suppose you could claim the pension, asking the Administrator to clarify the amount of automatic lump sum and the amount of the 

balance that should be allocated to each tax year. It may be that  your pension income for each year was below the personal 

allowance? You say that the pension now is worth £12,000 per annum but presumably it was less ten years ago?  And what about the 

lump sum?

2013-2014	£9,440
2014-2015	£10,000
2015-2016	£10,600
2016-2017	£11,000
2017-2018	£11,500
2018-2019	£11,850
2019-2020	£12,500
2020-2021	£12,500
2021-2022	£12,570
2022-2023	£12,570
2023-2024	£12,570
2024-2025	£12,570

Once that has been sorted out you would need to look into the tax situation as previously discussed.   You would also need to clarify your situation with DWP.

Do check your State Pension Forecast.

Many thanks for this. Reference the non return of the forms - they were sent to my previous address (rather than me having received them), hence…they weren’t returned.  The upheaval I went through in the following years meant I wasn’t giving much thought to the pension.

When I enquired with myCSP earlier this year, I was asked if I had returned the claim forms- when I explained what had happened, the Administrator said that a duplicate would be sent to my current address (which I now have). In view of all the information I have found out in the interim, that’s why I’m now hesitant in signing & returning.

The pension would have been £11700 from year 1; so just above the PA for the first 5 years. The lump sum, 3 times that amount.

Dazed_and_C0nfused

Catonthemoon said:

@xylophone  You were not working after some point in 2013 so may well have needed credits to bring you up to full NSP.

I don't know what your situation was in respect of these credits or (if you received them) what effect your non declaration of the entitlement to the IHR pension  may have - possibly none, another matter to clarify woth the powers that be.

Thank you for the explanation of the old & the new. I checked my forecast online - 35 full years;  23 from employment, 12 from NI credits giving a SP of £223 pw. Your last sentence… another thing to be concerned about 🤔

So you might need another two years to reach the standard new State Pension of £230.25.

One extra year will add £6.57 taking you to £229.57.  A second year will add the final 68p.

Although if you have missed some pence if your £223 amount it might just be one year needed to get to £230.25.

Silvertabby

If your pension was £11,700 from year 1, it's going to be nearer £16K now (Public sector pensions increase by uncapped CPI).  Even if HMRC allow you to pay the tax due by year, you will still have a substantial tax bill - and the longer you leave it the worse it will get.  

xylophone

Pondering the ins and outs......

I am just imagining the situation  of a hypothetical Civil Servant who became too ill to work at age 50, was medically retired but (let's say) had a  very well paid spouse so saw no need to draw the pension he had been awarded until (for example) his spouse retired.

By not returning the forms, he effectively chooses to defer the ill health pension. I suppose he might even explain his situation to the Administrator and be told that by not returning the forms he was choosing not to bring his pension into payment. I don't know.

BUT he does not claim Means Tested Benefits or any benefit that would give NI Credits automatically.  

I had a look at this.  https://www.gov.uk/employment-support-allowance/eligibility

In terms of his state pension, it would appear that he could apply for NI credits. I have a vague memory that this matter was discussed on the benefits board some while back.

Therefore it would seem that even if you did not qualify for MTBs,  NI credits would still be  available - you would need to check.

Your situation differs from the above in that you have claimed MTBs for a number of years when an ill health pension was DUE  AND PAYABLE immediately.

That pension was taxable income.  The Pension Commencement Lump Sum ( around £35,000) was tax free) but would have been regarded as capital.

It seems likely that you would have been unable to claim CT/HB etc in these circumstances/

In the circumstances, it would seem that you should claim the pension, sort out the tax situation with HMRC and contact the DWP to explain what has happened.

It seems likely that you will need to make some repayment to DWP/the local council (?) -  presumably this will be calculated for you and some sort of repayment schedule arranged.

However, you will have your pension and as your income will be modest, may qualify for some help with housing costs?

Good Luck with it all.

Marcon

xylophone said:

By not returning the forms, he effectively chooses to defer the ill health pension. I suppose he might even explain his situation to the Administrator and be told that by not returning the forms he was choosing not to bring his pension into payment. I don't know.

You have provided really valuable input in previous posts on this thread, but I'm not sure this sort of speculation is at all helpful to OP.  They are a real person, not some sort of case study - and I think there's a danger of overlooking that. 

There is no provision in the Classic regs for deferment. The application for IHER is for immediate payment of that pension/lump sum and that is what is specified at every stage of the process. 

xylophone

  a real person, not some sort of case study - and I think there's a danger of overlooking that. 

Indeed, and I don't.

I was merely pondering - is that forbidden on the forum?

And indeed the expectation is that the pension is taken immediately.

However, what is clear is that there can be no payment before the necessary forms are completed.

If a person chose not to complete the forms, it would not (presumably) make him ineligible for the pension.

He would be just as ill and incapable of work and (presumably) entitled to it.

Whether or not the Administrator could withdraw the offer I don't know. 

BUT choosing not to take the IH pension and then applying for MTBs........ not on I suspect.

Catonthemoon

@Marcon Thanks a lot for your input. Instead of saying “forfeit my pension”, it would have been more accurate to say “have to repay the amount that’s accumulated over the years”. I don’t think I would lose entitlement to my annual pension, a modest £12k or so.

In terms of ‘research’ - again, I suspect you’re right when you say “forget it”. Firstly, what I had been looking at was a post in a thread titled ‘Backdated Occupational Pension’ (see Newcad’s comment on 14/03). Assuming he/she knows what they’re doing, then it occurred to me that if I leave things as they are, take no action, wait until I’m 67, that might have the best outcome for me ( because everything changes then).

Secondly, whilst making my enquiries, it was mentioned to me that “UC looks forward, not backwards”, in other words, whatever has gone before isn’t taken into consideration- it’s only from the point in which a change of circs is reported in an assessment period. I can’t remember if I saw that elsewhere on this forum or if it was mentioned to me by a staff member at the DWP ( I contacted them asking how I would be dealt with)…I probably should take that with a pinch of salt! I can hear a Decision Maker in my ear saying “yes, that is correct in almost every situation… except yours”!!

Btw, I have now been migrated over to UC (from ESA) - not sure if that has any bearing on the matter?

Yes,  I am aware of the £6 - £16k savings reporting requirements & have always adhered to that.

Marcon

Catonthemoon said:

it was mentioned to me that “UC looks forward, not backwards”, in other words, whatever has gone before isn’t taken into consideration- it’s only from the point in which a change of circs is reported in an assessment period. I can’t remember if I saw that elsewhere on this forum or if it was mentioned to me by a staff member at the DWP ( I contacted them asking how I would be dealt with)…I probably should take that with a pinch of salt! I can hear a Decision Maker in my ear saying “yes, that is correct in almost every situation… except yours”!!

Stop for a moment and apply common sense. If that were true, plenty of people would try their luck by simply not reporting a change of circumstances, or deliberately delaying. The onus is on the individual to do so - promptly.

The DWP can (and will) look back as far as they wish if they believe/find someone has not complied with that requirement, especially if they suspect fraud or simply incorrect information.

Your change of circumstances was 12 years ago and that's when you should have reported it - so that's what the DWP will look at (ditto your local Council). The same would apply to anyone else who had failed to report such a change.