Benefit Crystallisation Event and Teachers pension scheme - can anyone help?

[BeaTwix]

My oldie was a teacher (Scotland). They also have a private pension unclaimed at age 76 (sigh). I know bugger all about private pensions as I'm firmly within my own occupational scheme.

Private Pension provider have sent me a letter I barely understand about life time allowances and benefit crystallisation events.

"Have you taken any retirement benefits on or after 6 April 2006
from any registered pension scheme? You can ignore any state
pension or pensions which arose from the death of another
individual.
Yes No
If ‘Yes’ what is the total percentage of the standard lifetime
allowance that you have used up at all previous benefit crystallisation
events (BCE’s)?
At each of these BCE’s you should have received a lifetime
allowance certificate, or a letter of confirmation, from each provider.
A copy of either of these documents will need to be provided."

Where on earth do I get this information?
Can I pay someone else to deal with ?

If so, who am I looking for - financial advisor? Someone else?

Yours very confused and pissed off that once again oldie has dumped crap on me being not making decisions. Who doesn't claim their fucking pension that they paid into for twenty years.

Gosh how infuriating. This might help? https://thepeoplespension.co.uk/pension/manage/how-to-find-a-lost-pension/#:~:text=Contact%20your%20previous%20employers,down%20your%20lost%20pension%20pot.

Or this https://www.gov.uk/find-pension-contact-details

Also Age Uk have loads of information https://www.ageuk.org.uk/information-advice/money-legal/pensions/tracing-old-pensions/

@BeaTwix this might help:
https://pensions.gov.scot/pensions-taxation/lifetime-allowance/understanding-lifetime-allowance

The provider has to be sure they don’t need to deduct any tax before they can pay benefits. Each pension provider - other than state pension - will have confirmed the percentage of lifetime allowance used up by taking the notional value of the whole pension before it is put into payment.

Yes, a good financial adviser could help but you’ll have the letter of authority / POA challenge there too.

Does she receive any of her own pensions now - or just state and dependant’s pension(s)?

This is easy if it’s the only pension as you can just say ‘No’ to the first question but I think there’s a history of lots of accounts if I remember rightly?

They have an occupational pension which they are in receipt of.

And yes, you've remembered correctly - lots of accounts/ financial institutions involved but only one private pension and one occupational pension.

If they have one other occupational pension and they claimed it all in one go then it might be possible to find the percentage - any hope of paperwork from the time they claimed that pension benefit?

I’m assuming it was claimed on or after 6 April 2006 - the percentage would be on quotes around then, as well as on benefit confirmation letters - it might also be re-confirmed on statements.

Do you have PoA? If so you can employ a Financial Advisor to sort this out for you. If your oldie still has capacity you can get them to authorise the advisor too.

Or email the pension provider explaining the situation and they may at least be able to explain what this all means, even if they can't tell you specifics relating to an individual. In my experience providers are generally quite helpful.

@Thingamebobwotsit I agree that pension providers have been among the easiest organisation to deal with - my oldie has 3 private pensions and I only had to have letter correspondence with one. They all had email and one had an online query forms and I could upload photos of PoA to 1 of those.

I’m hoping this is an easier job 🤞

@BeaTwix there’s a possibility the private pension is an Additional Voluntary Contribution scheme alongside the teacher’s pension or as a separate private pension left intentionally (if income was not needed) because of the way pension death benefits work (although the rules have changed in the last couple of years).

It could well be worth talking to a financial adviser before going ahead and claiming.

The benefit crystallisation even woiud be any tax-free lump sum talen from the teacher's pension when first claimed. The pension scheme should be able to confirm what this was.

@NoBinturongsHereMate all the benefits ‘crystallised’ count towards the percentage of lifetime allowance ‘used’ so the amount taken as cash and pension at retirement.

It can be as simple as pension (say £25,000 a year) x 20 = £500,000
Then if the Lifetime Allowance was £1m then 50% of the Lifetime Allowance has been used.

It will depend what the pension benefits crystallised were valued at and the Lifetime Allowance applicable at the time.

For the vast majority of people a pension exceeding the lifetime allowance is a dream. But in the hypothetical example above, if the pension was £50,000 a year then 100% of a £1m Lifetime Allowance has been used up.

Pensions have been subject to tinkering and so the Lifetime Allowance has actually been abolished now BUT it was probably applicable when @BeaTwix’s oldie took their teacher’s pension.

The lifetime allowance was replaced by a tax-free lump sum allowance. So it's only the tax-free part that needs calculating now, not the total pension value.

The teachers pension, as a public sector defined benefit pension, doesn't work in the same way as a defined contribution union pension for tax-free lump sum calculations. Pretty sure it's the same as the NHS one, for which only the initial lump sum is counted - because there's no option to take subsequent lump sums, and all monthly payments are fully taxed (unlike a DC pension, where you can choose to use part of the tax-free amount for ongoing payments rather than using it all at once on the first lump sum).

But the key point for @BeaTwix is that the teachers pension scheme administrators will have done whatever calculations need doing, and should be able to re-issue the paperwork. Then just forward that to the other pension provider.

@NoBinturongsHereMate I knew things had changed but I didn’t realise how much - which makes pensions claimed under the old rules more confusing if claiming something now! I do hope @BeaTwix gets good service from the pension companies.