TDG Pension Scheme changes

downshifted

A further update:

The TDG DC pot has transferred into the HL SIPP

The Booker AVCs have transferred into the HL SIPP (JLT Benefit solutions again doing a good job and HL seem to have got their act together now too)

The TDG DB transfer value is still in the process of being moved over.

The amounts are a bit higher than expected - maybe totalling £14,500 or so depending on the final DB amount

The plan is to take all the 25% tax free asap and then half the remainder this financial year, and then the other half next financial year - that should keep him under the income tax allowance for the year, providing he defers his state pension until April 2017 (We live on my income)

My questions now are

- I presume that leaving it in cash in HL makes most sense? I know he misses out on interest, but such short term stocks and shares investment would be daft

- also we should not close the SIPP account until it has been open a year to minimise charges?

- there is headroom for him to pay in £2880 for this year - can he do this and take the 25% of the £3600 it becomes straightaway?

- Am I right to think we have to send in a form P55 to inland Revenue when he takes the taxable part of his pot?

Many thanks for any help

xylophone

He will get a little bit of interest on cash in the SIPP - there is no charge to hold cash in the HL SIPP. If he wants the lot out in the short term he may prefer not to risk market volatility.

Keeping the SIPP open for more than a year obviates the high HL fee that would be charged on closure.

Even if he is a non earner, he can contribute up to £2880 net into the pension scheme and HL will claim the tax relief.

http://www.hl.co.uk/pensions/interactive-calculators/tax-relief-calculator

http://www.hl.co.uk/pensions/sipp/frequently-asked-questions



"We request basic-rate tax relief from HM Revenue & Customs (HMRC) on a monthly basis for all personal contributions made between the 6th of the previous month and the 5th of the current month (inclusive). We receive the tax relief from HMRC and apply it to clients' accounts on the 21st of the following month (or the next working day if the 21st is not one), so this is always 6-11 weeks after the date of the initial contribution.

For example, if you made a contribution on 15 March, the basic-rate tax relief should be available in your account on 21 May.

To view the dates tax relief will be received, download our tax relief calendar."

https://www.gov.uk/claim-tax-refund/you-get-a-pension

downshifted

Thank you, Xylophone, for this helpful post

downshifted

Just an update - he now has all the pots transferred in and has paid in this year's contribution and had the tax relief credited - the total pot is now nearly £19k

The plan is to take 25% plus half the rest this tax year and the remainder next tax year

Just a few remaining concerns

- please will you point me to the correct terminology for what he wants to do - I am confused between the different types of drawdown/crystallisation routes

- please will you point me to the correct tax form to fill in so he doesn't get taxed as though he is getting £7k every month when it is just once a year

- is it possible for him to pay in another £2880 next tax year before taking 25% of that tax free and then finally withdrawing everything? It would just mean deferring the State pension a bit longer)

Many thanks for all your help on this - it has been fiddly to sort out but well worth it

kind regards

xylophone

You should download and read "Key features for drawdown in the Hargreaves Lansdown SIPP".

From what you are saying, he intends to take the Pension Commencement Lump Sum and then to start taking an income.

If he has £19,000, then he will take £4750 as the PCLS and then £7125 as income.

In the absence of a P45 HL (see downloaded booklet) will tax the income on an emergency basis while waiting for a tax code from HMRC - your husband would need to reclaim the overpaid tax form HMRC.

See https://www.gov.uk/claim-tax-refund/you-get-a-pension

Your husband can make an additional contribution to the SIPP of £2880 in the new tax year and HL will reclaim the tax relief - however, HL say that you should call them to discuss how this works.

http://www.hl.co.uk/pensions/drawdown/faqs

"Please call us on 0117 980 9940 if you would like to discuss how this works in more detail."