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Author Topic: A dreaded pension question  (Read 6607 times)

lucgeo

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A dreaded pension question
« on: 05-07-17, 12:50PM »
Ok a bit long winded but bear with :(

1) if I took out my old pension, is it, as previously stated on this sight, paid up to if I was of full retirement age?

2) as I am currently below the tax threshold, due to the amount concerned, would I have to pay tax on the 75% which is taxable?

3) for the remainder of the year, would I now be eligible to pay 20% tax on my monthly wage as, due to the payout received, taking me over the annual £11,500 allowance, or is it dealt with as different income?

4) if yes to all the above, would I be better applying for it at the end of the financial year??

Thanks in advance for anyone who can give us a clue?? 

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Diva

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Re: A dreaded pension question
« Reply #1 on: 05-07-17, 01:06PM »
When I took out my pension I received 25% tax free and the rest was taxed at normal rate. I don't think it is taken against your taxable allowance. If at the end of financial year you wages and taxable pension lump sum are less than allowance of 11500 you apply for tax refund. The pension lump sum is paid separately into your bank account. I hope this helps. Apologies if not it is my first post .I am still working for tesco part time and took it all last year when we moved over to new pension.

lucgeo

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Re: A dreaded pension question
« Reply #2 on: 05-07-17, 01:19PM »
Diva thank you!

Did you take yours midway of the financial year? Do you normally pay tax?

I understand that 75% is taxable and goes into bank account, I just need clarification that I won't be paying tax for the rest of the year, and that the payment is not included in my annual allowance?

I know I could get pension advice, but I prefer to get my answers from here, where people don't tut because of my ignorance :(
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silver surfer

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Re: A dreaded pension question
« Reply #3 on: 05-07-17, 01:50PM »
Question 1. It really depends on at what age you take the old pension. If you take early retirement ie over 55 but under 65.If you take it early then expect your pension to be reduced approx by 5% for each year earlier you take it. So if you take it at 55 you will get about half of what you would get at 65. Makes sense really as theoretically be getting a pension for a longer period. Also if you take early retirement on old pension but remain employed by Tesco  ie. "flexible Retirement" you will get less than if you left the company altogether.

Princess2016

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Re: A dreaded pension question
« Reply #4 on: 05-07-17, 02:19PM »
You will continue to be taxed normally on your income. I believe you would have to complete a tax return for your pension income and would then either pay a tax bill or receive a refund. Whichever is applicable to you depending on you current income circumstances.

lucgeo

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Re: A dreaded pension question
« Reply #5 on: 05-07-17, 02:56PM »
Silver Surfer

I have tried unsuccessfully, to find the thread where I believe ? Equaliser ? Stated that a clause of changing the pensions, was that if you took out your closed pension, they would need to pay up to retirement age?? For a limited time??

I will try and message to him/her confirm?
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laughinggravy

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Re: A dreaded pension question
« Reply #6 on: 05-07-17, 05:02PM »
Lucgeo, I saw the post you refer to and I think whoever it was had got their facts wrong. I have just sent off for a pension forecast and it is definitely not the full pension that I would get if I wait til my official retirement date. I've had enough though - and I'm off anyway!!
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stockrotateman

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Re: A dreaded pension question
« Reply #7 on: 05-07-17, 06:33PM »
In the booklet on the consultation on the old and new pension, some of the changes from the feedback from staff on excepting the new pension, six suggestions from staff, only 4 were agreed by tosco, number 4 was early retirement from the existing scheme. Quote, protect those close to retirement by not changing the amount we reduce pensions by when it's taken early. Unquote. Tosco agreed to this, quote for existing scheme members who retire from tosco in the next three years. Unquote. Now this booklet is dated 24/8/2015. So that part is still current. Its signed off by Alison Horner chief people officer for tosco.

laughinggravy

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Re: A dreaded pension question
« Reply #8 on: 05-07-17, 06:49PM »
Thanks stockrotateman, I shall look into that then. The thieving barstewards.
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lucgeo

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Re: A dreaded pension question
« Reply #9 on: 05-07-17, 07:46PM »
Stockrotateman

First off congratulations, you come up on my predictive text ;D

So from what you have stated, a colleague in their late fifties would not qualify for the top up, not being close to retirement age?? They would have to be retiring from Tesco, three years before their retirement age  ??? ???
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stockrotateman

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Re: A dreaded pension question
« Reply #10 on: 05-07-17, 08:50PM »
Lucgeo, it's only my opinion but I think anyone over 55 can claim it without any reduction within the three year time frame. The way it is worded is confusing doesn't really state 3 years before full retirement or 3 years from the start of the new pension, which I believe started November 2015. Ring them up challenge the reduction, inform them of the consultation booklet. Consult a financial advisor who should be able to decipher tosco pension. I have posted about this before and I don't know how other people have gotten on after challenging there figures, maybe they could post on here and let us know how they got on?

lucgeo

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Re: A dreaded pension question
« Reply #11 on: 06-07-17, 09:13AM »
Thanks for that ;)

I want to take the lump sum, and close that pension, then increase to 7.5% contribution on the new pension to take me to 15% with Tesco contribution of 7.5%.

The way things are going in Tesco, I'm not looking to work to full pension retirement age, and envisage me hanging up my PDA within the next 3-4 years ??? I pray for a redundancy offer in that timeframe.
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blutopia

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Re: A dreaded pension question
« Reply #12 on: 06-07-17, 11:56AM »
I'm sure stockrotateman is correct with his quote, but knowing Tesco they may not interpret that in the way a potential retiree would.  One sticking point, lucgeo, might be that you may be required to retire (i.e. leave Tesco) to get an un-reduced pension.

As for the other questions in the original post:

2)  You will need to get a pension quote from the Tesco Pension Department.  That will tell you the amount you would be able to claim as a tax-free lump sum - it will be LESS THAN 25 per cent of the total value of your fund.  The quote will also state the annual pension you can receive.

You MAY be able to transfer the entire fund into a private pension scheme that would enable you to claim the full 25 per cent tax-free lump sum AND give you the flexibility to even take the whole lot (paying tax on the 75 per cent).  HOWEVER, if your pension fund is worth more than (I think) £30,000 you HAVE TO have a review by an Independent Financial Advisor that will cost you around £3,000 up front with NO GUARANTEE that they will approve the transfer out of the Tesco scheme.

3)  The annual pension payable IS subject to tax IF, when added to your wages, it is above the personal tax allowance (currently £11,500 for most people).  So, no, pension income isn't treated differently - it's all income as far as HMRC is concerned!

4)  Much depends on how much your wages are below the personal tax allowance.  If, say, your wages are £1,000 below the personal allowance and your pension quote says your annual pension would be £2,000 per annum, you would not pay tax if you activated the pension halfway through the tax year.

I hope that is clear enough!

Hammer10

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Re: A dreaded pension question
« Reply #13 on: 06-07-17, 12:07PM »
Can I take my lump sum and not take the rest of my pension as I turn 55 next year approx 40000 pounds

blutopia

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Re: A dreaded pension question
« Reply #14 on: 06-07-17, 12:22PM »
I doubt you can, Hammer10 - you would need to ask the pension department.  You would also need a pension quote to find out the lump sum that would be available - it's likely to be quite a bit less than 25 per cent as the old pension is a defined benefit scheme so different rules apply.

If you can't defer taking the non-lump-sum part of your pension, you would pay tax on the pension if (combined with your wages) the amount was over the personal tax allowance.  You COULD invest the pension you receive if you don't need it but you would be lucky to get a bigger return than you would have lost to the taxman!

stockrotateman

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Re: A dreaded pension question
« Reply #15 on: 06-07-17, 12:36PM »
Hammer 10, no you cannot do that, only if you transfer it to a private pension, where you can do what they call draw down and if it's below certain amounts each year you don't pay tax, but check with a financial advisor first. The old Tosco pension is run with no charges made to members, that isn't so with private pension scheme and when you transfer it they charge you for that as well. :thumbup:

stockrotateman

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Re: A dreaded pension question
« Reply #16 on: 06-07-17, 12:43PM »
Blutopia, the 25 per cent is all tax free. The remaining pension is paid monthly at basic rate tax and paid each month on the same days as colleagues salaries. Or don't take the 25 per cent and your monthly payments will be higher, but you will pay tax on it, so the 25 per cent cash is worth taking. When you receive your statement the two examples are shown you pick one and they follow your instructions.  :thumbup:

Welshie

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Re: A dreaded pension question
« Reply #17 on: 06-07-17, 04:58PM »
I don't understand my pension at all but maybe someone can answer this , now that our pension has moved columns in our wage slips , so we're now being taxed on our contributions,  Does that mean when we receive that part of our pension will it be tax free or will we in reality then be taxed twice in the same earnings ??

stockrotateman

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Re: A dreaded pension question
« Reply #18 on: 06-07-17, 05:07PM »
Welshie, I can't answer that one as I am know longer in the pension and never joined the new one. But pension contributions should be tax free, that's why everyone is encouraged to join one, contributions should not be included in deductions.

Welshie

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Re: A dreaded pension question
« Reply #19 on: 06-07-17, 07:52PM »
Stockrotateman  , it changed columns after the error had been discovered that after pension payments had come out we were not making minimum wage . So I assume we now pay tax before contributions are taken out but could be wrong ???

Adywebb

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blutopia

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Re: A dreaded pension question
« Reply #21 on: 06-07-17, 08:36PM »
Blutopia, the 25 per cent is all tax free. The remaining pension is paid monthly at basic rate tax and paid each month on the same days as colleagues salaries. Or don't take the 25 per cent and your monthly payments will be higher, but you will pay tax on it, so the 25 per cent cash is worth taking. When you receive your statement the two examples are shown you pick one and they follow your instructions.  :thumbup:

If you get a pension quotation, the lump sum is tax free, but it is not 25 per cent.  It's not the same as a defined contribution/private pension.

notsofunny

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Re: A dreaded pension question
« Reply #22 on: 06-07-17, 08:50PM »
Stockrotateman  , it changed columns after the error had been discovered that after pension payments had come out we were not making minimum wage . So I assume we now pay tax before contributions are taken out but could be wrong ???
pension contributions are tax free . And any lump some is also.But if you are claiming any benefits the that lump sum will be counted as income . Remember that your pension investment will go down in size. So when you do come to claim your pension the pay out will be smaller .Remember if you keep your money in the pension it is growing tax free.
« Last Edit: 06-07-17, 08:56PM by notsofunny »

JFDI

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Re: A dreaded pension question
« Reply #23 on: 07-07-17, 12:31AM »
Lucgeo, it's only my opinion but I think anyone over 55 can claim it without any reduction within the three year time frame. The way it is worded is confusing doesn't really state 3 years before full retirement or 3 years from the start of the new pension, which I believe started November 2015. Ring them up challenge the reduction, inform them of the consultation booklet. Consult a financial advisor who should be able to decipher tosco pension. I have posted about this before and I don't know how other people have gotten on after challenging there figures, maybe they could post on here and let us know how they got on?

I dug out the booklet and decided to contact an USDAW pensions advisor for some clarity on that paragraph having received an early retirement quote from Tosco. Answer went something like this: any DB pension built up pre 1st June 2012 is increased in line with the Retail Price Index and thereafter up until its closure in line with Consumer Price Index. For any colleagues who joined before 2006 they can opt to apply for early retirement within the next 3 years on the terms for early retirement that were on the table prior to the scheme closure i.e. reduction based on amount of years taken early. One can only assume that there is a plan to offer a less generous early retirement settlement figure when the 3 years have paased. Basically if you are in a position to take early retirement now you may be better off doing so as the terms will become less generous. That was my interpretation of what I was advised but I'm no expert!

lucgeo

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Re: A dreaded pension question
« Reply #24 on: 07-07-17, 07:12AM »
JFDI  :thumbup: :thumbup:
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