Paying £2880 into pension when retired

TBC15

molerat said:

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.

I think you need to keep £1000 in the account to keep it open.

NedS

Audaxer said:

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.

And because that £1000 is going to sit there until you are 75 and are no longer able to take advantage of this "loophole", you may as well invest it rather than leaving it sat there as cash, as depending upon your age you may have a 10-20 year investment timeline.

Audaxer

Benny2020 said:

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

Benny2020 said:

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

If your earnings are well under your personal tax allowance, you can withdraw the full £3,600 by UFPLS without it being subject to any tax, so you would effectively get the full £720 tax relief as profit.

Audaxer

NedS said:

Audaxer said:

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.

And because that £1000 is going to sit there until you are 75 and are no longer able to take advantage of this "loophole", you may as well invest it rather than leaving it sat there as cash, as depending upon your age you may have a 10-20 year investment timeline.

You could invest the £1,000 but what if the value was to fall below the £1,000 - I thought that would mean that HL would close the SIPP?

NedS

Audaxer said:

NedS said:

Audaxer said:

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.

And because that £1000 is going to sit there until you are 75 and are no longer able to take advantage of this "loophole", you may as well invest it rather than leaving it sat there as cash, as depending upon your age you may have a 10-20 year investment timeline.

You could invest the £1,000 but what if the value was to fall below the £1,000 - I thought that would mean that HL would close the SIPP?

Pretty sure they only close if you only have cash and that value drops below £1000 because you make a withdraw. If you were to purchase £1000 of a fund and it drops to £900 I think you'll be fine.

Rob749

I have a £1000 invested, and recently fell down to 800, with the virus thing. Nothing happened, they didn't close, so you should be fine.

tigerspill

Hi,
My wife is just about to retire and has been putting money into a SIPP to supplement her work pension.
Next year she will have no earned income.  And she plans to start to drawdown on this SIPP.
While taking money out of her SIPP, can she still put the £2880/£3600 into a SIPP?  She has the savings to do this, but with today's understanding - would this breach any recycling rules?
Thanks

xylophone

 can she still put the £2880/£3600 into a SIPP?

Yes -  she can pay in her £2880 and receive the tax relief up to age 75.

akh43

I am finally in a position to do this for the first time, but confused as to where to start.  I started to read through the 106 pages of comments, but as some of them are from 2017 I am not sure if the advice or rules have since changed and don't want to do the wrong thing.

I am aged 61 and my only income is a works DB pension of £13,225.80, so I pay tax of £12 a month.

Any pointers would be appreciated as I have gone on the HL website but have no idea where to start.  Thanks

xylophone

https://www.hl.co.uk/partners/search/sipp?theSource=PCHLS&Override=1&adg=G+HLBS+SIP+OLP&gclid=EAIaIQobChMIjcDhz5Pf6wIVyLvVCh3DjwxWEAAYASAAEgLs3fD_BwE

You would start by opening the pension and making the contribution of £2880.
Tax relief dates here https://www.hl.co.uk/help/sipp,-drawdown-and-annuity/sipp/tax-relief/when-will-tax-relief-be-received