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Pension Refund

  • 28-03-2020 3:10am
    #1
    MacConmheadha
    Registered Users Posts: 77 ✭✭


    I left a job at the start of the year which ultimately meant I left their pension scheme. The letter I got from the company handling the pension said I would only be taxed 20% if I chose to get a refund. I was in the job for less than two years.

    I chose the refund and got the money in my bank account yesterday however I was taxed at 40%.

    I won't hear back from them until Monday (hopefully) as to why I was taxed an extra 20% but would anyone have an idea why? a mistake on their end?

    If it was their mistake I'm guessing I just paid an extra 20% tax and won't be able to get it back?


Comments

  • #2
    Wuff Wuff
    Closed Accounts Posts: 1,429 ✭✭✭Wuff Wuff


    MacConmheadha wrote: »
    I left a job at the start of the year which ultimately meant I left their pension scheme. The letter I got from the company handling the pension said I would only be taxed 20% if I chose to get a refund. I was in the job for less than two years.

    I chose the refund and got the money in my bank account yesterday however I was taxed at 40%.

    I won't hear back from them until Monday (hopefully) as to why I was taxed an extra 20% but would anyone have an idea why? a mistake on their end?

    If it was their mistake I'm guessing I just paid an extra 20% tax and won't be able to get it back?


    Someone else could probably word it better but

    It could be that the refunds are usually processed on the date the completed claim forms are received and the fund value of that date is used not what is on the letter that is sent out (should say something like please note these values are not gaurenteed)

    Markets have been falling during this pandemic

    This probably affected your value which was then taxed at 20%


  • #3
    antix80
    Registered Users, Registered Users 2 Posts: 2,419 ✭✭✭antix80


    The 20% charge applies to pension administrator rather than to you as income tax.
    So they won't ever charge you 40%


  • #4
    Henry Ford III
    Moderators, Business & Finance Moderators Posts: 17,737 Mod ✭✭✭✭Henry Ford III


    antix80 wrote: »
    The 20% charge applies to pension administrator rather than to you as income tax.
    So they won't ever charge you 40%

    OP said it was 40% tax.


  • #5
    coylemj
    Registered Users, Registered Users 2 Posts: 25,479 ✭✭✭✭coylemj


    MacConmheadha wrote: »
    I chose the refund and got the money in my bank account yesterday however I was taxed at 40%.

    Did you get relief at 40% on the contributions? It looks to me like this was a miscommunication on the part of the pension provider.

    If the taxman gave you relief at 40% then it seems only fair that if you get a refund, the 40% tax that you did not pay on the contributions would fall due.


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