Scottish Widows Personal Pension

[tamborine]

are cheats! Theyve deducted 35% from my late OHs pension for HMRC. Ive been qerying SW to pay me the FULL amount as my OH bought.

Now SW write that IRev share is 55% payout. Beware when you buy pension plans coz it seems a big con to me. Unless anyone can explain this ?

[Canary42]

With the exception of state war pensions, all pensions are taxable income as far as I know.

[boxtops]

That's my understanding too - if your total income including State pension is over the minimum personal allowance, you'll be taxed on it. I suggest you contact your tax office and ask them to clarify your tax position. You might have to fill in some forms about your total income but it should set the record straight for the future.

However - some pension plans only pay out in full anyway to the policyholder, the widow/er gets a lesser amount in some of them, could this be the case this time?

[factor-fiction]

I think we need more info, tamborine. First of all I don't understand the figures of 35% and 55% since they only add to 90%. I doubt very much Scottish Widows are cheating and are only deducting whatever tax they need to deduct.
Are they deducting tax from the pension income you are receiving from your husband's pension? If so, they do have to deduct tax at source (since they don't know what other income you have) unless you can declare you have no other income or HMRC will agree a tax code. I can't see why it's 35% deduction though

[janbee]

I pay tax on my private pension. I think it's the norm. Everyone has to pay tax if their income is over a certain amount. The level is to be raised VERY slightly next year, but most people will still be clobbered for tax on their private incomes/pensions.

[factor-fiction]

Agreed janbee, but if someone pays tax at 20% on the whole of a private pension and their only other income is a state pension, they will probably be due a tax refund since the state pension is well below the tax threshold. If someone has just a state pension and a single private pension they should try to get a tax code applied to the private pension so some of their tax free allowance is used against the pension. Or they should apply for a tax rebate each year

[janbee]

I got a £496 rebate last year. Hoping for the same every year now !! Doubt it though.

[factor-fiction]

Hi tambo- please can you clarify exactly what the pension 'payout' is (is it monthly pension or lump sump payment), what type of pension it is (state, personal or employer's pension), and what the deduction is (35% or 55%?).

[johnny37]

it is quite normal for the surviving spouce to receive 50%. You are doing well if you receive 65%. Also, as others have said, the amount you do receive is taxable if your total icome is over your personal limit.

[tamborine]

Its a lump sum payout.

IR say they dont know why 35% was withheld in their favour. Gov Pension Adv.org claim they dont understand it & I ask SW for more info. My OP is SW response !@!@@## phooey

[boxtops]

Well, get back to the taxman and ask them to sort it out with SW!

[jomifl]

You got a tax rebate on the amount you paid in and you got interest on the unpaid tax, now it is pound of flesh time. You know what they say about death and taxes. If you think they are wrong get an accountant on the job, at least someone other than the IR will get your money :o(

[factor-fiction]

I'm not understanding this, tambo. I'm not sure in what circumstances you'd be taking a lump sum from your spouse's pension. Sorry to have to ask this but it may help me understand- how long ago did your spouse die? Have you been receiving any monthly pension already from this pension fund? Or was it an annuity that was already in payment. There are circumstances in which tax is deducted at this sort of rate.
Unless you can give all the info I think it's better for you to sort it out with Scottish Widows.
You are clearly upset but i doubt very much that Scottish Widows are setting out to cheat you

[overthetop]

FF, I greatly respect your knowledge in this area where I have none so a bit hesitant to post, but I pay quite a lot of tax on my state pension, which is deducted from my no. 1 private pension payments.

[factor-fiction]

I'm not sure what point you are making, overthetop. There is no tax deducted at source on your state pension. There is tax deducted on your private pension. Overall you have a personal tax allowance of £8440 or £10660 depending on your age. You need to check each year you aren't overpaying tax as you are probably due a rebate

[overthetop]

No tax deducted at source on my state pension, but there is tax due as it exceeds the tax free allowance (I never opted out), so it is deducted from my private pension.

[factor-fiction]

Yes, that's what I thought I'd been saying, overthetop.


I wonder whether tamborine is not talking about simple income tax though. Maybe this is to do with annuities- maybe drawdown annuities.

There is a referenece to a 55% charge here: "Tax on death benefits from benefits already used will be charged at a rate of 55 per cent, but the lump sum paid on death will not form part of the individual's estate for inheritance tax (IHT) purposes."

http://www.ftadviser.com/2011/10/14/pensions/personal-pensions/government-publishes-new-pension-annuity-rules-OHu8xMplvzUPtY0HMPirHP/article.html

[overthetop]

FF, I have acknowledged your greater knowledge and sound advice. Just wanted to clarify "their only other income is a state pension, they will probably be due a tax refund since the state pension is well below the tax threshold". My state pension, thankfully or not, does attract income tax. But still within the 20% band. I said I was hesitant to post, and now wish I hadn't :-)

[factor-fiction]

Thanks. Yes, I can see you may have thought I meant they'd get all their tax back. I just meant they'd have overpaid tax if it had been deducted at basic rate from all their private pension and if their only other income was state pension.

Anyway, I'm pretty certain tambo is talking about annuity drawdowns not income tax deductions

[overthetop]

Keep up the good work Factor, your advice is wise and much appreciated.