Pension question

[cromwell]

Today I received my first full four-week state (old age!) pension payment. I got a printed statement from the atm yesterday and another one today so I could work out how much it was.
I got a bit of a surprise, as it doesn't appear to have had any tax taken off. I have a vocational pension which is taxed, and strangely enough I seem to have got paid less on that this month.
So what's going on? Is the tax I expected to be paying on my state pension being taken off my vocational pension? Or is the state pension not taxed?
Confused of Wakefield.

[Workingman]

Cromwell, let me try this.

You pay tax on your total income if it is above £12,570 per year.

I am in a similar position. The full OAP is £179.60 per week and for me that gets paid in full every two weeks - £359.20. The tax I have to pay is taken from my occupational pension, which is paid monthly, and the amount is notified to me on my annual forecast statement. It can be adjusted if things change.

It seems sensible to me to take the tax from one place rather than a bit here and a bit there.

Check with your occupational pension provider how much you will be getting from now on and how much tax you will be paying from it. The rate is 20% in the £ so it is not that hard to work out.

Example: State pension is £9339.20 per annum. Let's say your occupational pension takes you to £14,000 you will need to pay tax on £14,000 minus £12,570 = £1430.

£1430 x 20% = £286, this is the tax to pay. £286 / 12 = £23.84 and that is what will be taken from your occupational pension each month.

Hope that helps.

[cromwell]

Thanks Frank, yes it does.

[TheOstrich]

Yes, exactly wot Frank said.

You should have got / get an annual Tax Coding Notice for your occupational pension income which will explain how and why your tax code is now reduced from the standard 1257L.
Worth keeping an eye on this each year and making sure they've got it right!

[Workingman]

I was going to say what Ossie said.

This year's payments will be a bit strange due to when your OAP kicked in, but next year's TCN should be easy to check and work out as it is for the full year.

A quick tip, Ossie will know what I am talking about, get yourself a simple accounting app - and I do mean 'simple' - to track things. For two accounts, say current and card, AceMoney Lite works well. Get it here, it is the last on the list.

[cruiser2]

Cromwell,

I have been receiving the State pension which has included soem Graduated pension.No tax or other deductions are made from this amount.
It is paid into my bank account every four weeks.

I also get an occupational pension from my last employer. Tax is deducted from this as t takes me over £14000 p.a.
It has been like this for many years since I turned 65. I get an annual statement showing my tax code, allowances and other information from HMRC.

If you are now paying tax you will not be entitled to any benefits apart from a free bus pass.

[cromwell]

Thanks Cruiser, i didn't know about the no free benefits.
May as well apply for the bus pass though, it will get me into the next village where there is a nice pub.