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Pension payment confusion

4 replies

nineyearsapart · 15/02/2021 12:55

Hi guys any help would be appreciated. My dad retired in January, his state pension is £635 every four weeks. He has had two payments of his workplace pension; his work place pension is just over 29,000 a year.
Here is where he has become confused. The first payment he received was £2803, with an income tax reduction of £368; the tax code is 1250L. The second payment is significantly lower, £2242 with a deduction of £382 and a tax code of 431L. Both payments have a tax basis of week 1 month 1. He is wondering if they are deducting all of his state pension from his work place pension and just generally is really confused as to what's going on. I dont think that's quite whats going on but at the same time I have no answers. Any help would be much appreciated

OP posts:
LIZS · 15/02/2021 12:58

The tax code on first payment assumes no other income as it is the full personal allowance. It has been adjusted on second to allow for his state pension being tax free.

nineyearsapart · 15/02/2021 13:06

@LIZS thanks so much for the reply. I'm really clueless, so any further explanations would be much appreciated. He is assuming that the lower amount is what he will get monthly from now on. Do you have any idea why it is £600 lower than the previous payment?

OP posts:
LIZS · 15/02/2021 13:12

Because they have deducted more tax. His gross income will be his state pension, work pension and any other investment income ie interest. His pa is approx 12500, the rest is taxable. £635x13=8255. 12500-8255=4245 ie roughly the new tax code.

nineyearsapart · 15/02/2021 13:31

Thanks so much @LIZS the thing I think that is confusing him is the income tax deduction is virtually the same between the two yet, there is a big difference in the amount he is getting even before the tax deduction. I think he assumned that he would get equal pension payments and then whatever tax owed would be deducted from it. As it is, for this months payment he received £600 less than last months yet the income tax payment is slightly higher. I really appreciate your advice.

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