Recent £2880 Investment

olly50

The only income my wife has is her state pension, after taking advice from this forum we put £2880 in a Virgin stakeholder pension for her. Last week the HMRC contribution of £720 was added to the pension. I am now thinking about closing the pension and taking the money. Are there any rules I should be aware of when closing this pension, like only being allowed to open and close a pension a specific number of times or HMRC claiming back the money if it does not remain invested for a certain term.

atush

One thing you should look at is he current value of the pension- what did you invest in? If you invested in funds the value might have dropped. Cash you are ok.

One thing that will affect her is, if you take income from a DC pension you are restricted to 10K (not 40K) annaul allowance. But as she has no earned income this wont affect her.

What would affect her, is if youc an use that money (and savings) to defer her state pension for a year. Which would increase her SP by over 10%.

dunstonh

after taking advice from this forum we put £2880 in a Virgin stakeholder pension for her.

This forum is not authorised to give advice.

Last week the HMRC contribution of £720 was added to the pension. I am now thinking about closing the pension and taking the money.

have you checked the value recently?

Are there any rules I should be aware of when closing this pension, like only being allowed to open and close a pension a specific number of times or HMRC claiming back the money if it does not remain invested for a certain term.

None on an amount like this.

olly50

In reply to DunstonH: The advice I received was a suggestion and the value of the pension is currently £3612.
Today I went through the terms and conditions for the pension and found a paragraph saying you can take the whole fund as a lump sum, however you can only do this three times within your lifetime. I sent a message to Virgin asking whether this is a government restriction or a Virgin restriction and I received the following reply "Thank you for your recent contact regarding your Virgin Money Stakeholder Pension. The section of terms and conditions 14.5 relating to only taking three small pot pension payments is a legal requirement of the governments recent pension changes. It is not Virgin Money specific. Please note that although you may only take three small pension payments, you may still take further pension payments as uncrystalised funds pension lump sums or UFPLS. Under a UFPLS there may be further tax implications."
I am now wondering about a UFPLS pension for next year, could I pay £240 per month into it and take income of £300 per month?

xylophone

I am not quite sure that small pots is relevant to the case?

Your wife could take the lot (presumably Virgin would remit 25% tax free and operate month 1 tax on the balance) - she would reclaim the overpaid tax from HMRC.

She could then set up another pension arrangement, pay in the £2880, get the tax relief then take the money in a similar way?

She could do this until she is 75?