Lump sum payment to boost pension fund for triviality withdrawal.

ATF101

I have moved this from another thread as I was conscious I had hijacked another users question and continuing would only create confusion.

ATF101 wrote: »

Out of interest. Is it permissible, while not paying tax, to contribute £2880 (£3600) to an existing pension fund and then in the same tax year exercise a triviality option?

With no other income and a low pension fund say £10k then in theory the 20% tax refund is free cash.

Is this too simple?

Thank you Linton for your input and I will try to explain the position.
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Linton wrote: »

AFAIK you could do this if the £10K is your only pension, but I am not an expert. Some relevent points..

1) After the first 25% the encashment is subject to income tax. So the gain would not be as large as you may have hoped.

As the total, after the 25% reduction, would be less than my allowance for the tax year and with no other income, I thought I would be able to reclaim the tax stopped at source by the end of the year.

2) You can only claim triviality once - this isnt an ongoig income stream.

Position understood.

3) If this is the only retirement provision the problems are much larger than can be resolved by a £700 tax gain. Perhaps that is where someone in the position you put forward should be devoting their attention.

Point taken. I have sufficient income from ISA's (cash and S&S) also, OH's final salary pension provides generous cover.
This particular fund (my only one) was built up from recent part time work where I took advantage of 'employer matching' pension contributions. I am just trying to maximise the benefits.

Thanks.
ATF.

jamesd

It's fine as a plan.

For other readers, just be aware that any work-related final salary pensions and any other pensions except the state pensions have a value and could bar triviality if they exist and are worth enough. I know you've said that this is your only one so this doesn't apply to you.

ATF101

jamesd wrote: »

It's fine as a plan.

For other readers, just be aware that any work-related final salary pensions and any other pensions except the state pensions have a value and could bar triviality if they exist and are worth enough. I know you've said that this is your only one so this doesn't apply to you.

Your input is much appreciated.

ATF.