Being stupid or doing the right thing?
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I am going to ask for an up to date statement of benefits and these are the questions so far that I am going to ask -
Is it defined benefit or defined contribution? If it's defined contribution does it have a guaranteed annuity rate or guaranteed minimum pension and what are the values and other terms of those? Is the value of the guaranteed benefits more than £30,000?
I've just looked on that calculator you have posted the link to and it seems that if I drew the 25% tax free income and put £5000 of it into a SIPP with HL, it would get tax relief of £1000, does that sound right? I realise that that TR wouldn't go in until a few weeks into May.
Can you open more than one SIPP and get two lots of tax relief, ie two £2880, although that would probably be above my earnings?0 -
Also, if the TR doesn't go in until later in May, 2017/2018 tax year, would that mean I couln't draw some of it and do it again in that tax year?0
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Be aware that a DB pension can have ( will almost certainly have) a GMP.
https://www.barnett-waddingham.co.uk/comment-insight/blog/2014/08/18/what-is-a-gmp/
Even when there are no relevant earnings, it is possible to pay £2880 into a RAS pension scheme and receive tax relief of £720.
This can be done each year up to age 75.0 -
I also need to know what age it could be drawn as well don't I? Although as they told me a year or two back that I could have the 25% tax free lump sum, I presume I am of an age that applies to draw it.0
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If a DB Scheme, it is perfectly possible that Normal Scheme Pension Age ( the point at which benefits could be drawn without actuarial reduction) was age 60.0
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Be aware that a DB pension can have ( will almost certainly have) a GMP.
https://www.barnett-waddingham.co.uk/comment-insight/blog/2014/08/18/what-is-a-gmp/
Even when there are no relevant earnings, it is possible to pay £2880 into a RAS pension scheme and receive tax relief of £720.
So some questions to ask are: is it definited benefit or defined contribution? If it's definited contribution does it have a guaranteed annuity rate or guaranteed minimum pension and what are the values and other terms of those? Is the value of the guaranteed benefits more than £30,000?
This can be done each year up to age 75.
If it is possible time wise though to get the 25% tax free lump sum and open a SIPP, can I put more in than £2800, say up to £5000? I know the tax relief wouldn't go in until May but would that count as 2016/2017 or 2017/2018, in other words could I do it again in 2017/18?0 -
It is a bit awkward as the new management don't take over until April 1st, so very little time this year.0
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If you want to make pension contributions in this tax year you need to do it before 5 April.
As previously explained, this can be up to net relevant earnings.
The tax relief received on the 16-17 year relates to that year's contributions even though received later.
You can make another contribution up to net relevant earnings (or £2880 if less) in 2017-18 and receive tax relief.0 -
xylophone - I have read the info in the above link regarding GMP - thank you.
It has gone over my head a little bit, but from what I can gather, because my leaving date was before April 1988 (I left around 1983), my pot should have increased by around 8.5% a year, which to me sounds good.
It receives another increase on April 6th.
This is all supposing it is a GMP of course.
If I have understood it properly, I would be better to leave it all in until after April 6th, then draw out my 25% tax free to open the HL SIPP.
I think I have to then have a weekly/monthly payment if it stays where it is, so I could defer my SP and take that instead, I think I read somewhere that that increases by 10%whilst deferred?
Would I be right in thinking whatever is left in the GMP will still increase by another 8.5% the following April.
Also, will this only be paid for the 5 years as the leaflet on death benefit said -
'The pension guarantee period runs for 5 years' ?
Sorry to keep bombarding you with questions!!0 -
If you want to make pension contributions in this tax year you need to do it before 5 April.
As previously explained, this can be up to net relevant earnings.
The tax relief received on the 16-17 year relates to that year's contributions even though received later.
You can make another contribution up to net relevant earnings (or £2880 if less) in 2017-18 and receive tax relief.
As the official take over date is April 1st, which is Saturday, the next working day is Monday 3rd so I think it will probably be too late to bother with this year anyway so I think I am going to have to forget about this tax year.
I have not got my books up to date for 2016-2017 anyway so not sure what my earnings will be, although I could finish them off in time as I know no more will come in now. My earnings will probably be more this year than I am expected to earn next year.
I take it the pension payments will not be counted as relevant earnings in respect of paying into a SIPP?
I think its highly unlikely that I would want to pay in more than £5000 from my Tax free lump sum anyway though as I have some debts I want to pay off. An extra £1000 TR will come in handy for that.
Can the contribution for the following year be paid in over the year, ie, so much a week/month, I'm sure you or jamesd mentioned it in another post?0
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