pension pot

[bloggsy]

Hello all. It’s nice to be forewarned, so here is a question for forum experts. - We, my wife and I, are both state pensioners in our seventies. We live in a council flat. We have both worked all our lives and we rely on housing benefit and other benefits that we are entitled to. My wife recently received a letter, telling her that she is entitled to a works pension from years ago which she had forgotten about. She worked for that company for ten years back in the 1980’s. She was 60 when she retired in 2004 and it has taken all this time (nearly thirteen years) to find her, because when we married, she changed her surname to mine and we changed address. Her state pension is taxable and is her only income. None of our other benefits are taxable and we have no other income apart from our state pensions and a tiny private pension which pays me a couple of hundred pounds a year. Her state pension totals approx £5000 per year. Her personal tax allowance is £11,500 (as far as I know) per year. Although she is not expecting a large amount, how large would her pension pot have to be before she would be liable for tax at 20 percent? Is my guess of around £8,500 somewhere near (wouldn’t that be nice)? Thank you for any answers.

[brian54]

Hello all. It’s nice to be forewarned, so here is a question for forum experts. - We, my wife and I, are both state pensioners in our seventies. We live in a council flat. We have both worked all our lives and we rely on housing benefit and other benefits that we are entitled to. My wife recently received a letter, telling her that she is entitled to a works pension from years ago which she had forgotten about. She worked for that company for ten years back in the 1980’s. She was 60 when she retired in 2004 and it has taken all this time (nearly thirteen years) to find her, because when we married, she changed her surname to mine and we changed address. Her state pension is taxable and is her only income. None of our other benefits are taxable and we have no other income apart from our state pensions and a tiny private pension which pays me a couple of hundred pounds a year. Her state pension totals approx £5000 per year. Her personal tax allowance is £11,500 (as far as I know) per year. Although she is not expecting a large amount, how large would her pension pot have to be before she would be liable for tax at 20 percent? Is my guess of around £8,500 somewhere near (wouldn’t that be nice)? Thank you for any answers.

I think you have got to explore all of your options.
I do know somebody where the trustee thought the person was not entitled to a pension but the auditors picked it up about 3 years later and having 3 years pension together would have just taken her in to the tax bracket for that year.
The inland revenue did waive it as it was the fault of the trustee.
Her future benefits were adjusted but none were taken back from previous years as it was decided she did not have the pension at the time they were paid.
Your case is unusual and you will have to take the advice of the inland revenue and departments paying the benefits as I think it may have been the decision of some officer and a different officer may have taken a different decision.

[JCBDriver]

Tax only kicks in when your total taxable income exceeds the personal allowance.
So in the case you have outlined your wife has 6,500 of unused allowance when state pension is taken out.

If the new pension exceed this HMRC will instruct the pension provider to deduct the tax payment at source depending on the new tax code your wife will be assigned due to the additional income.

[peterpensioner]

You also be aware that if you were claiming any means tested benefits between 2004 and now, that could have been affected by the pension that your wife was eligible for, that there might have been an overpayment of benefits. Sadly the DWP expect you to take all the income that you are eligible for and will argue that it is your responsibility to know about any pension that you are due. Also are you eligible for Pension Credit ? - that's worth checking. If you are in doubt about any of this go to your nearest CAB and ask for a benefit check.

[sparky]

My knowledge of pensions etc  is very limited, but maybe having that extra income could effect your eligibility for some benefits, maybe take it out in a lump sum, if that's possible and spend it on a new car, Holiday etc.

[bloggsy]

Thank you all for your helpful answers. There is obviously a lot to consider.

[Scrumpy]

Welcome to the site bloggsy.

[Alfred]

its always  nice seeing new members, so welcome bloggsy,

[eegrek]

After your wife receives the forgotten pension and the sum of the two pensions is less than £10,400 do not forget that you can claim £1100 additional tax relief using the married man's tax transfer benefit. Assuming you are paying some tax every year.

[StevieG]

Your best bet is to go to the Citizens Advise Bureau.  They will either give you advice or tell you where you can get advice.

Regards,

StevieG

[GrannyMac]

After your wife receives the forgotten pension and the sum of the two pensions is less than £10,400 do not forget that you can claim £1100 additional tax relief using the married man's tax transfer benefit. Assuming you are paying some tax every year.

Or vice versa. It's a 'married person's' tax allowance.  Sorry to be pedantic, but in some cases the wife has higher earnings/pension.

[Alfred]

hello bloggsy,


Have you ever thought of contacting your tax office, as  iv found them very helpful,   in the past and even very recently ,I contacted them and I was surprised just how helpful they really were , its well worth a phone call, I did, and had all my questions answered ,

[StevieG]

Sounds like it would be a good idea if you both thought back on your working lives to see if there might be other employers that offered a pension.  Seek and you may find!

Regards,

StevieG

[brian54]

Sounds like it would be a good idea if you both thought back on your working lives to see if there might be other employers that offered a pension.  Seek and you may find!

Regards,

StevieG

I can only agree with this.
I had an employee who worked for a company for a short time and I knew that company normally offered pensions and I suggested he enquired.
He did and found they were trying to trace him.
He said the amount he got was sufficient to pay for the petrol, tax and insurance for his car.
I have never seen him in a new car but he always runs a decent ( 2 to 5 years old) car at all times since retirement.