Paying £2880 into pension when retired

trickydicky14

Bowlhead to the rescue yet again, thanks that’s a huge help.

Will contact HL for questionnaire and application form re: UFPLS

bowlhead99

trickydicky14 said:

Bowlhead to the rescue yet again, thanks that’s a huge help.

Will contact HL for questionnaire and application form re: UFPLS

You can do  HL's UFPLS risk/suitability questionnaire over the phone to save posting it back and forth - it is just yes/ no questions like 'i understand that if i take a lump sum from my pension now I will get less income in future'.  From memory they need to have one on file dated within the last 6 months if you request to take an UFPLS, so in the past my mum has done the questionnaire in the last few months of one tax year to cover a UFPLS then and then another UFPLS a few months into the new tax year.   

The standard approach is to just post or email the questionnaire to you (but email might be annoying if you don't have a printer) so we did the questionnaire over the phone one year to make sure we didn't run out of time to catch the end of the tax year while waiting for the mail. The actual request to take the UFPLS was a separate document which would need to be signed each time you want to take one.

molerat

Even easier you can complete the questionnaire on line and they mail out the illustration and application form to fill in and send back in a freepost envelope, no need to speak to anyone. https://www.hl.co.uk/retirement/ufpls/illustration

Audaxer

trickydicky14 said:

£3600 scenario, in a pickle can you help?

As a retired non tax payer, I started the HL SIPP thing (£2880 topped up to £3660 draw it down)

My first payment was March 2019 just before the end of the tax year. I then payed in again in April of 2019, both payments got topped up so far so good.

I then applied to go into drawdown and continued to take money out throughout 2019, I purposely left £1000 in the account due to HL closing accounts with no money in them during the first year.

So, April 2020 I contacted HL and asked them to ‘re-activate’ my account so I could continue to pay money in, this they did and I payed in again for this tax year.

I now have two accounts, one SIPP with £3600 in and one SIPP in drawdown with £1000 in.

I have just attempted to take money out of the drawdown account and a message stated this account would be closed if I dropped below £1000? As the account has been opened for over a year, why would they close it as the one-year rule does not apply?

Secondly, if it did get closed, would I have to go through the palaver of requesting to put this year’s money into drawdown?

And thirdly, I could have this wrong but did I read somewhere I can only go into drawdown three times? If this was the case, what would I do when I want to put my SIPP I have with Vanguard and my main pension with Zurich into drawdown in the years to come.

I Know someone will say why not ring HL and ask, well I just feel this whole malarkey of using HL for this tax break is taking the Pxxx a bit so I thought I would ask on the forum first.

Thanks for any help.

I think it is preferable in most cases just to have the one SIPP and take the full amount out once each year by UFPLS rather than drawdown. You do always have to leave £1,000 in to keep a SIPP open. So the first year it is usual to pay in £2,880 and once the £720 tax relief is added you can only take out £2,600 by UFPLS to keep the SIPP open. From year 2 onwards you pay in £2,880 and after the tax relief is added take out £3,600 by UFPLS. 

So in your position I think it would be best to close off the drawdown SIPP, and take out a UFPLS for £2,600 from the other SIPP and leave £1,000 in there to keep it open. So from next tax year you can pay in £2,880 and once the tax relief is added, take out £3,600 by UFPLS, and repeat that process every year.

molerat

As to HL timescale.  Applied and filled in questionnaire on line Friday 19th June.  On line message with options received Saturday 20th, illustration and application form received in post Tuesday 23rd and back in post pm.  Money in account today. They have slightly ignored the withdrawal amount requested and left £1001 in the account, not sure why but not concerned.

Benny2020

If i am close to my tax threshold would the extra £720 a year earned from this 2880 - 3600 count towards my earned income and put me over?

molerat

The £720 added is not income, it is 75% of the withdrawn amount that is taxable income so £2700 if taking the full £3600 out.

Benny2020

so if i put £2880 in i have to pay tax on it if i withdraw it?

drumtochty

No if you pay in £2,880, after two months ot so it has the £720 tax relief added. It becomes £3,600. You can take £900 out tax free. The remaining £2,700 so £180 below the £2,880 you put in is taxable at your existing tax rate. If you are over 55 years of age and have no other income or an income of around £12,500 less £2,880 around £9,620 you pay no income tax on the £2,880 taxable income from the SIPP.

TBC15

drumtochty said:

No if you pay in £2,880, after two months ot so it has the £720 tax relief added. It becomes £3,600. You can take £900 out tax free. The remaining £2,700 so £180 below the £2,880 you put in is taxable at your existing tax rate. If you are over 55 years of age and have no other income or an income of around £12,500 less £2,880 around £9,620 you pay no income tax on the £2,880 taxable income from the SIPP.

Should that last bit say £2700?