Deciding to retire

These notes will help you complete Part 4 of the Pension and Deferred Pension Claim form and declaration.

Two lump sum allowances were introduced from 6 April 2024. If the total of all lump sums you take from UK pensions is more than one of these allowances, you will have to pay extra tax. Tax on any excess is charged at your marginal rate. Most members will not be affected because the maximum lump sum they can take is much lower than the allowances. If you have built up a large pension in the LGPS or a different scheme, the new allowances may affect you.

You can find more information about the lump sum allowances here and at https://www.lgpsmember.org/your-pension/the-essentials/tax.

Question 1

Pensions that started before 06/04/2006

Have you any pensions that started to be paid before 6 April 2006, if you do we need you to add together the current total annual amount of all your pensions that started to be paid before 6.4.2006 and insert the amount in the box provided.

Question 2

Lifetime allowance % (LTA)
Before 6 April 2024, the lifetime allowance limited the total amount of pension benefits a person could have before they paid extra tax. The lifetime allowance has now been replaced by the new lump sum allowances.

If you took payment of pension benefits before 6 April 2024, you will have used up LTA. Unless you hold a TTFAC (see question 3), you should tell us the percentage of LTA you have used for any pensions and lump sums taken between 6 April 2006 and 5 April 2024. The pension scheme that pays/paid these benefits to you will have notified you of this. If you are close to the limit we may need to contact you again and ask about the amount of any lump sum you received.

Question 3

Transitional tax-free amount certificate (TTFAC)

If you took payment of a pension or lump sum before 6 April 2024, these payments will have used up part of your lump sum allowances. Under HMRC rules, we must assume that you took the maximum lump sum allowed.

If you took less than the maximum lump sum allowed, you can get a transitional tax-free amount certificate. The certificate sets out the total lump sums you have received. We will then use these amounts to calculate how much of the lump sum allowances you have used, rather than assuming you have taken the maximum amount. For most members, a TTFAC will have no effect on the lump sum they can take from the LGPS. The allowances will generally only affect members who have built up very large pensions.

If you hold a TTFAC, you do not need to tell us about pensions or lump sums taken before 6 April 2024. You must send the TTFAC with your declaration form.

If you are thinking about applying for a transitional tax-free amount certificate, you may wish to seek specialist independent financial advice. Some members could be worse off if they apply than they would be without a certificate.
You must apply for a certificate before you take a pension lump sum after 6 April 2024. Please contact us if you would like to apply for a certificate.

Question 4

Received a lump sum after 06/04/2024?

Have you received any lump sum payments after 6 April 2024 but before your pension with us. If you have, we need to the know the total lump sum amounts received (from all your pension schemes). Please insert the total in the box on the right (remember we don’t need to know about any regular pensions you receive or any lump sums paid before 06 April 2024, in this section).

If you took an uncrystallised funds pension lump sum (UFPLS) from 6 April 2024, we only need to know about the tax-free amount.

A UFPLS is a payment made from uncrystallised funds held in a money purchase arrangement. In the LGPS, an UFPLS can only be paid to members of LGPS Scotland who have paid additional voluntary contributions.

Question 5

Due to receive a lump sum from another provider on the same time?

Have you any lump sums from other pension schemes that you will receive on the same day as WYPF. If you are due to receive benefits from another pension scheme and are likely to exceed the HMRC limit, the order which benefits are taken will determine which scheme(s) will be responsible for settling any tax liability. Unless you tell us otherwise we will assume you want your benefits with us to be treated as taken first. You should tell your other schemes this.

Question 6

Lifetime allowance (LTA) protections and enhancements

Have you applied for and been granted any HMRC certificates - Primary, Enhanced, Fixed or Individual Protection. If yes need to send us a copy of the certificate from HMRC that confirms your entitlement to protection.

The Government reduced the lifetime allowance three times after it came into force in 2006. Each time it reduced, those people who had already built-up large pensions could apply for protection from the reduction. If you have an LTA protection, your lump sum allowances could be higher than the standard limits.

You can still apply to protect your lifetime allowance by applying to HMRC for Fixed or Individual Protection 2016. The deadline for making an application is 5 April 2025. See https://www.gov.uk/guidance/pension-schemes-protect-your-lifetime-allowance for more information.

LTA enhancements

You may have applied for these if you transferred a pension to the UK from overseas or you were awarded a pension credit as part of a divorce/dissolution of a civil partnership.

Question 7

Transfers to an overseas pension scheme

We need to know if you have transferred any UK pensions abroad since 6 April 2006 to 5 April 2024. If you have please confirm the date of the transfer and the amount transferred.

Declaration section of claim form:

We ask you to confirm you have not received either a Serious Ill Health Lum Sum or a Stand Alone Lump sum. Some brief information about these lump sums is shown below.

Serious ill health lump sum

A lump sum paid where your life expectancy is expected to be less than one year.

Stand-alone lump sum

A special type of lump paid to individuals who, on 5 April 2006, had the right to have all their pension scheme benefits paid as a tax-free lump. These are not common and are not payable from the LGPS.