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Rakhi Vasavada
Rakhi Vasavada, Financial Advisor
Category: Finance
Satisfied Customers: 4550
Experience:  Attorney and Financial Expert. Have specialization in Financial Laws.Practice experience of over 13 years
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I was advised by my then-accountant to opt out of Serps (I

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I was advised by my then-accountant to opt out of Serps (I think) for a few years and ended up with a private pension of £109 per month. When I hit retirement age this amount was deducted from my state pension. I have queried this with the DWP and twice they have insisted "this is how it works." Is this correct?
Dear Friend, Hello and welcome. Thank you for providing the opportunity to assist you. I am sorry to be the bearer of bad news, but YES, This is Correct.! Let me try and explain it. The private / state pensions, (I mean, private pensions as well) that you receive are treated as earned income for income tax purposes, although you are no longer liable to pay any further National Insurance contributions once you have reached State Pension age. The amount of income tax that you pay depends on your gross income (the total amount of income potentially liable to tax that you receive from all sources, including other pensions and bank or building society interest). You don’t pay any income tax on your gross income up to your personal allowance but I sense that your income is more than your personal allowance and this is causing the deduction to happen. Once again, you might not be able to gather what I said, OR, might find it confusing to say the least but I am just trying to confirm that what DWP is saying is correct. I am sure this would help. I wish you good luck. You may please leave a positive rating if this helps as this is the only way we are compensated for assisting you. Alternatively, you may revert back with a reply if you need further assistance or if I have missed out on any aspect of your question. Warm Regards,
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Customer: replied 2 years ago.

Dear Ms Vasavada

Thanks for your reply. I fully understand --- apart from the fact that my income has been minimal since 2008. In fact, I operate as a limited company which has made a loss for seven consecutive years.

Therefore my only income has been Pension Credit since I was made redundant in 2008, and, since 2011, my State Pension. My Pension Credit has, obviously, been greatly reduced since I reached 65 but I have recently been awarded Attendance Allowance for health reasons. Because I took a lump sum when my private pension started, it does not increase. So I also miss out on the percentage increase I would have got if I only had the state pension. I wonder if any of this makes any difference....?


Roy Shipston

Dear *****,

Hello and welcome again.

No that will not make any difference as I understand from your situation. But as you say, the reasons mentioned by you are also the contributing factors.

Please feel absolutely free to get back to me any monent. It was absolutley pleasure working you.

I wish you good luck and great health ahead.

Warm Regards
Customer: replied 2 years ago.
Hi Rakhi.... I do not have further questions. I did give you a "good" rating...


Dear *****,

Many thanks for your "good" rating.

It was total pleasure assisting you. Hope to work with you in future as well.

Warm Regards