Retirement lump sum VEC

looksee

I wonder if anyone has any thoughts on this situation. I will go and make some proper enquiries tomorrow but I would like to have an idea what I am talking about. I did a bit of research online, but didn't find anything useful.

I have retired from a relatively few years' teaching and was given the amounts for a (very small) lump sum and pension. I have just got the documentation but it says that my lump sum was the amount I had been told, but that there was a deduction of about 25% 'in respect of arrears of Superannuation contributions'. I was not aware I had missed any contributions, and why tell me the figure was x if it was obvious that it was going to be x minus 25%?

It also says that the deducted amount is tax allowable - which presumably means I will only be taxed on the lump sum that I received rather than that which I was quoted? (Well, duh!)

The pension amount is the amount I was quoted.

Does anyone have any thoughts on this, thanks?

bdoo

Lump sum should be tax free. I think tax deductible means that you can claim some back against tax. Your VEC or pensions section should be able to help.

If in trouble your union can advise

looksee

Thankyou, yes, as I said I will go into the VEC tomorrow. It says that the deduction is tax allowable, not deductible. My main concern is why I seem to have suddenly developed 'arrears' of contributions.

bdoo

looksee wrote: »

Thankyou, yes, as I said I will go into the VEC tomorrow. It says that the deduction is tax allowable, not deductible. My main concern is why I seem to have suddenly developed 'arrears' of contributions.

Had you full service of a break?

spurious

Is there a minimum period of contributions before you can claim?

bdoo

spurious wrote: »

Is there a minimum period of contributions before you can claim?

To my knowledge every year of service for which contributions have been paid entitles you to a pension of 1/80th of your final salary to a maximum of 40 years service. So even with say 5 years service you would get a pension of 5/80ths which would be sweet f.a.

Lump sum is final salary x 1.5

You do need to wait until normal retirement age to claim pension in full or it may be actuarially reduced unless you took one of the incentivised early retirement schemes

spurious

Yes, but if, say, you had, for argument's sake, 8 years 10 months paid into the scheme (allowing for pt hours etc.) and you wanted to 'retire' after ten years service (but not ten years contributions) that might be where the arrears are coming.

I don't know, I've never heard of anyone retiring on a low sum. I thought you had to wait until you were the retiring age to claim it.

bdoo

spurious wrote: »

Yes, but if, say, you had, for argument's sake, 8 years 10 months paid into the scheme (allowing for pt hours etc.) and you wanted to 'retire' after ten years service (but not ten years contributions) that might be where the arrears are coming.

I don't know, I've never heard of anyone retiring on a low sum. I thought you had to wait until you were the retiring age to claim it.

Could be a late entrant or someone who left teaching early AMD is only one entitled to draw a pension

rainbowtrout

Did you have some years where you were working part time/subbing, not under contract and not paying contributions or something like that?

looksee

I am retiring at retirement age, but have only been teaching for (condensed from pt hours) just over 5 years. I did not realise I had any entitlement to a pension (in spite of paying a low pension payment, I was told I would get this back, rather than as a 'lump sum'). That seems to have changed as I am now getting a (tiny) pension and this payment is being called a 'lump sum'.

I will have to go in and ask, but I hoped to just be able to discuss it more intelligently if I knew what was happening!

bdoo

looksee wrote: »

I am retiring at retirement age, but have only been teaching for (condensed from pt hours) just over 5 years. I did not realise I had any entitlement to a pension (in spite of paying a low pension payment, I was told I would get this back, rather than as a 'lump sum'). That seems to have changed as I am now getting a (tiny) pension and this payment is being called a 'lump sum'.

I will have to go in and ask, but I hoped to just be able to discuss it more intelligently if I knew what was happening!

Tui could give you guidance in any case

spurious

The other people who seem to know a lot of about these things are the various insurance company people from Cornmarket and the like who regularly visit schools, admittedly trying to sell products, but they generally give free evaluations of various people's situations too.

looksee

Yes I missed out on that as I was under the impression that I would not have a pension at all, then something happened that the rules changed. My contract situation was a bit confused, I just can't see how they concluded that I was due a certain amount, then take 25% off it - how did they do the first calculation if the payments were not made?