Although lump sums are paid tax free, your monthly pension payments are taxable.
When you first start to receive your pension, your tax deduction will depend on whether we have been provided with your P45. If we have the relevant parts we will use the tax code specified. If we do not have your P45 then a basic rate tax code will be applied (currently 20% for normal rate tax payers).
The code specified on your P45 will be used until HMRC notify us of the tax code you should be on, which we will apply to your monthly pension.
To find out more about P45's please check the information below.
Until we receive the tax code notification it may take a little while for your pension to settle into a fixed regular amount. You will not receive a payslip every month on the pensioner payroll, however if your pension differs from the previous month by more than £5, this will generate a payslip.
If when we receive the tax code notification, you have underpaid or overpaid tax, your pension will be adjusted accordingly and any under or overpayment will be rectified.
If you have any questions about your tax code or how much tax you are paying, the Cornwall Pension Fund will not be able to help, you should contact HM Revenue and Customs (HMRC). Telephone: 0300 200 3300 Website: https://www.gov.uk/tax-codes PAYE reference: 470/T51230
When you retire your employer should send you part 1A of your P45 and send all other parts to the Cornwall Pension Fund. However, if you have been sent parts 2 and 3 please forward these to the Cornwall Pension Fund as soon as possible, so that we can apply the correct tax code.
We will apply the tax code as stated on your P45 and forward the relevant parts to HM Revenue and Customs (HMRC). After which, HMRC may notify us of a new tax code.
If we do not receive parts 2 and 3 of your P45 we are required to apply a basic rate tax code (currently 20% for normal rate tax payers). When the tax office notify us of the correct code, we will refund any overpayment or collect any arrears due.
For this reason it may take a little while for your pension payments to settle into a fixed, regular amount. If in the first couple of months your pension differs by more than £5, this will generate a payslip.
Please see when will I receive a payslip for further information.