If you have never heard of the term “second bite” then you’re not alone. Not many are aware of the additional pension payment you may be eligible for once you receive your NHS pension scheme when you retire. It’s a chance for further income and a tax-free feature that might be paid to you upon retirement.
This does not constitute advice and advice should be sought in all instances before acting on it.
Second bite eligibility
There are a variety of reasons you might not have been awarded your full pension.
One possible explanation is that the pensions agency does not have all the relevant information.
For example, if you retired before your trust/CCG could provide updated information on your income, which regularly happens to GPs because the information is normally submitted later than when the accounts need to be compiled.
When the pensions agency finally receives all the relevant information, you will be entitled to additional benefits – aka a “second bite.”
Alternatively, you might be due a higher tax-free lump sum.
For example, if you left the scheme on 30th September 2011 and retired the following year, the lump sum would have received the proportionate indexation between October 2011 and April 2012. This lump-sum would still be due an increase and the “second bite” would be payable April 2013.
Another possibility is that the basic calculations need to be checked because even the smallest details can affect the bigger picture.
For example, incorrect calculations may be made if you are a member of the 1995 pension scheme and your best year was not your last year’s pensionable pay. Or if as a member of the 2008 pensions scheme your three best years in the last decade were not the last three on your last day of service.
The possible effect on pension allowances
You could run into issues if your second bite takes you closer to your lifetime allowance as it could push you over the threshold and complicate tax liabilities. The indexation could be frozen if this is the case.
Additionally, as your annual allowance could be affected, you’ll need to request a new annual allowance statement to avoid problems.
Next steps
It’s always a welcome surprise to get additional income so if it’s possible you might be owed a ‘second bite’ of your NHS pension, reach out to your trusted financial adviser. We’re here to help you get any money you’re due, so get in touch with us today.
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