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Pension v repayment of Student finance

As a mature student, I will be able to take my occupational pension not long after I leave university. Will this pension be counted as 'income' and therefore I'll start paying my loans back (assuming it's over the threshold at that time)? I have an Advanced learner loan and (by then I will have) three years of Student loans. I cannot seem to find what Student Loans class as 'income'. Thank you.

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Repayments are only made from "earned income". Pensions are not earned income.
Original post by Firewood1
Repayments are only made from "earned income". Pensions are not earned income.

Thank you. Can you tell me the source of this information? The reason why I ask is that I have since contacted Student Finance, and they told me:

If my income is over their threshold then I have to start making repayments. Income can be earned, like a wage, which is then taxed at source.

If I receive 'unearned income', e.g. not taxed at source, like landlord rent income, or a pension, I'd have to complete a self-assessment tax return. At this point the same rule would apply, if my income is over their threshold then I have to start making repayments.
Reply 3
Avatar for marple
marple
15
Original post by MariaGunnars
Thank you. Can you tell me the source of this information? The reason why I ask is that I have since contacted Student Finance, and they told me:

If my income is over their threshold then I have to start making repayments. Income can be earned, like a wage, which is then taxed at source.

If I receive 'unearned income', e.g. not taxed at source, like landlord rent income, or a pension, I'd have to complete a self-assessment tax return. At this point the same rule would apply, if my income is over their threshold then I have to start making repayments.

This suggests that the first £2000 is ignored, but anything over that is taken into account:

https://help.accounting.sage.com/en-gb/personal-tax/ReturnData/Student-loans.html
Original post by marple
This suggests that the first £2000 is ignored, but anything over that is taken into account:

https://help.accounting.sage.com/en-gb/personal-tax/ReturnData/Student-loans.html

Thank you.
This is really interesting. It could be a bit of a shock if a person takes the whole private pension as a single chunk (for whatever unlikely reason). In most other scenarios, it doesn't seem to be too scary.
Original post by Firewood1
This is really interesting. It could be a bit of a shock if a person takes the whole private pension as a single chunk (for whatever unlikely reason). In most other scenarios, it doesn't seem to be too scary.

Thats why I was asking really, I'm able to start taking my pension in a few years time and didnt want to get caught out.
Original post by MariaGunnars
Thats why I was asking really, I'm able to start taking my pension in a few years time and didnt want to get caught out.

I am still confused, was this rule about unearned income from the start of the post-2012 student loans, or it was added later?
Encouragingly, the income ceilingto to trigger repayments seems to increase each year. One has to be beware of sporadic lump sums, as I have heard HMRC and SLC have a strange rule to interpret them as a monthly income, thereby multiplying it by 12 and then charging student loan repayment on that. Theoretically, HMRC can return the resultant overpayment, but they tend to do this through awkward means like a tax code.
(edited 3 years ago)
Original post by Firewood1
I am still confused, was this rule about unearned income from the start of the post-2012 student loans, or it was added later?
Encouragingly, the income ceilingto to trigger repayments seems to increase each year. One has to be beware of sporadic lump sums, as I have heard HMRC and SLC have a strange rule to interpret them as a monthly income, thereby multiplying it by 12 and then charging student loan repayment on that. Theoretically, HMRC can return the resultant overpayment, but they tend to do this through awkward means like a tax code.

I don't know when it came into force. Glad it does increase year on year. Yes, I have fallen foul of HMRC's "month one" rules before. Takes an age to get a refund.
Reply 9
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2500_2
18
Original post by MariaGunnars
As a mature student, I will be able to take my occupational pension not long after I leave university. Will this pension be counted as 'income' and therefore I'll start paying my loans back (assuming it's over the threshold at that time)? I have an Advanced learner loan and (by then I will have) three years of Student loans. I cannot seem to find what Student Loans class as 'income'. Thank you.

This FoI https://www.whatdotheyknow.com/request/pension_income_included_in_incom answers your question.
Essentially, it sounds like your pension won't take a student loan payment off at source, but you might be liable to make payments through your annual self assessment tax return.
Sure, it was pointed out in the post above by "marple". The fact of the matter that HMRC won't count £2000 of pensions towards the income qualifying as suitable for student loan repayment.
Reply 11
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fbacc
11
Original post by marple
This suggests that the first £2000 is ignored, but anything over that is taken into account:

https://help.accounting.sage.com/en-gb/personal-tax/ReturnData/Student-loans.html


I don't believe it is the first £2,000 per annum which is ignored. Rather that if the pension income is below £2,000 pa then it is not taken into account. However if it is above £2,000 then it is ALL taken into account. So this threshold could have a significant impact around that monthly level. It could be more cost effective to take a lower pension if at the £2,000 threshold if possible.
(edited 3 years ago)
Original post by 2500_2
Essentially, it sounds like your pension won't take a student loan payment off at source, but you might be liable to make payments through your annual self assessment tax return.

One person I know got an occupational pension of £6000 per year after years of work with a very decent salary and within a very lucrative final salary pension scheme. It is pretty much the same situation with money purchase pensions, where, for example, annuity rates are just miserable. So, personally, I would be very interested to know how people could manage to get pensions above the £26,000 per year, even assuming they are above state pension age of 67. Full state pension is about £8,000 per year.
(edited 3 years ago)
Original post by Firewood1
One person I know got an occupational pension of £6000 per year after years of work with a very decent salary and within a very lucrative final salary pension scheme.

Something wrong there. Someone with long service (say 30 years +) would get way more if they were on a decent salary.
Original post by Firewood1
One person I know got an occupational pension of £6000 per year after years of work with a very decent salary and within a very lucrative final salary pension scheme. It is pretty much the same situation with defined benefit pensions, where, for example, annuity rates are just miserable. So, personally, I would be very interested to know how people could manage to get pensions above the £26,000 per year, even assuming they are above state pension age of 67. Full state pension is about £8,000 per year.

Annuity rates are irrelevant to Defined Benefit Pensions , which final salary pensions are the most usual form

annuity rates are relevant to defined contribution / money purchase pensions

i think there is some degree of mis understading with regard to your assertions ref this hypotheticla person you assert has a Final salary pension of 6k / yr after 'amny years' of 'well paid ' work ...

unfortunayely without further information. i'm calling very sceptical on this , also IANAFA and IANYFA
Original post by ajj2000
Something wrong there. Someone with long service (say 30 years +) would get way more if they were on a decent salary.

assuming they didn't opt out at some point and only opted back in very much later, something which is biting some health professionals , who may have had crarrer breaks or gone very part time while rasing children and then come back to substantial part tiem or FT as children grew up , and then find they don;t have 30 years service they have 10
Original post by InArduisFouette
assuming they didn't opt out at some point and only opted back in very much later, something which is biting some health professionals , who may have had crarrer breaks or gone very part time while rasing children and then come back to substantial part tiem or FT as children grew up , and then find they don;t have 30 years service they have 10

Fine - in which case they don’t have long service.
Original post by ajj2000
Something wrong there. Someone with long service (say 30 years +) would get way more if they were on a decent salary.


Nothing wrong, really. I think many people have unrealistic expectations about the size of pensions they would get. This is my point.
Original post by Firewood1
Nothing wrong, really. I think many people have unrealistic expectations about the size of pensions they would get. This is my point.

With D.C. pensions I agree, with defined benefit it should be entirely transparent.
Original post by InArduisFouette
assuming they didn't opt out at some point and only opted back in very much later, something which is biting some health professionals , who may have had crarrer breaks or gone very part time while rasing children and then come back to substantial part tiem or FT as children grew up , and then find they don;t have 30 years service they have 10

Exactly, straight career lines are no more. And it will be even worse with volatile job market and most final salary pension schemes finding themselves in financial trouble and drastically reducing their commitments.
(edited 3 years ago)

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