Can you pay pension contributions from another pension payment?

bll78

I have an occupational pension that was paid out early due to ill health. However it is not going to be enough once I retire so I am wanting to start to pay into another pension to increase the amount. I have searched the internet but am struggling to get the answers to the following question:-
Is there a tax benefit to this like when it comes out of wages?

xylophone

once I retire

Do you still have earned income?

If not, you can pay up to £2880 into a pension scheme (stakeholder/PP/ SIPP) and it will be topped up to £3600 by the government.

Otherwise see http://www.hmrc.gov.uk/incometax/relief-pension.htm
"Limits on Tax Relief".

kidmugsy

Be careful. Does it look as if you will be a taxpayer once your State Retirement Pension starts? If so, using ISAs rather than pensions might be a good idea. On the other hand, if your health gave you access to higher annuity rates, that could be an advantage for pensions. It will depend on your personal circumstances: age, marital status, …...

vm2pensioner

You cannot recycle income from one pension into a new pension. If you have earned income, however, from another job you can invest in a new pension. If you have no earned income you can still pay up to £2880 into a pension, and have notional tax relief added (as post #2 says).

mania112

vm2pensioner wrote: »

You cannot recycle income from one pension into a new pension.

Yes you can and it's a recommended strategy if you do not require the income.

The only thing you can't 'recycle' is Tax Free Cash (and there are limits by which you can do that too).

mania112

So it seems to me that you want to recycle the income from the pension which is paying out now, while you're still working, in an attempt to increase your income when you finally do stop working?

This is fine. Make sure you don't over-contribute - the limits are shown in post 2 if you're not working.

If you are working the limit is 100% of salary or £40,000 (gross, from April) - whichever is lowest.

All of which will receive tax relief at your highest rate.

xylophone

You cannot recycle income from one pension into a new pension.

Not so - if you have only pension income, you can pay up to £2880 net (see above) into another pension.
http://www.aviva-for-advisers.co.uk/site/public/tech-centre/tech-article-detail/recycling-pension-income

bll78

Sorry in the delay replying it's been one of those days.
Yes I earn but not much. I was told I'd never work again hence the pension but have managed to find a role that is home based and fits around my condition. My earnings will be roughly £8,000 a year there's no employer pension scheme as I am doing it on a self employed basis.
Yes I assume I will be a tax payer when I retire although I have many years to go before I get there so the rules/thresholds are likely to have changed.
I am in my mid thirties, single although I live with my partner and am a home owner (my house and mortgage not joint).
I don't have a vast amount to put to one side for a pension, but after putting into a pension since I was 16, I don't want to suddenly stop and end up poor in my old age.
Thanks for your help

xylophone

Yes I earn but not much.

Then see link in post 2.

http://www.cavendishonline.co.uk/pensions/ might be worth a look.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/181237/single-tier-pension-fact-sheet.pdf re state pension.

vm2pensioner

xylophone wrote: »

Not so - if you have only pension income, you can pay up to £2880 net (see above) into another pension.
http://www.aviva-for-advisers.co.uk/site/public/tech-centre/tech-article-detail/recycling-pension-income

Which is what I said!
See also from the Aviva website you mention:

"...pension income is not classified as relevant UK earnings, so this income cannot be used to support tax relievable pension contributions over the basic amount of £3,600 each tax year....

As pension income (from either an annuity or drawdown plan) is not classed as relevant UK earnings, this can only be recycled if your client has relevant UK earnings at least equal to the gross amount paid as pension contributions."

e.g. from another job.

Annie1960

vm2pensioner wrote: »

Which is what I said!
See also from the Aviva website you mention:

"...pension income is not classified as relevant UK earnings, so this income cannot be used to support tax relievable pension contributions over the basic amount of £3,600 each tax year....

As pension income (from either an annuity or drawdown plan) is not classed as relevant UK earnings, this can only be recycled if your client has relevant UK earnings at least equal to the gross amount paid as pension contributions."

e.g. from another job.

So what about savings? If the OP has savings can these be used to pay into a pension?