Your pension is taxed.
HM Revenue and Customs (HMRC) set or amend your tax code based on your total income including the state pension and any other income you have.
As we do not set your tax code, all we can do if you question your tax code with us is to suggest that you contact HMRC (0300 200 3300).
Your lump sum at retirement paid from us is normally completely tax-free. Please note that, if your employer has awarded you compensatory added years, the lump sum arising from them could be liable to a tax charge.