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Paying £2880 into pension when retired

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  • Ganga
    Ganga Posts: 4,253 Forumite
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    colsten wrote: »
    You should be able to transfer £1,100 of your personal allowance to her
    https://www.gov.uk/marriage-allowance/how-it-works

    Thanks have done this so this should save us some mon:Tey
  • xylophone
    xylophone Posts: 45,615 Forumite
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    and deposit £3880 to each.

    Each parent would contribute £2880 - the tax relief of £720 would be claimed by HL making the amount in each £3,600.
  • MyOnlyPost
    MyOnlyPost Posts: 1,562 Forumite
    xylophone wrote: »
    Each parent would contribute £2880 - the tax relief of £720 would be claimed by HL making the amount in each £3,600.

    Yeah, the extra £1,000 was to leave in so HL don't close the account. That said if they can open and close a virgin account every year that will be better for them as they don't have to tie up £2k to keep the accounts open
    It may sometimes seem like I can't spell, I can, I just can't type
  • busybee100
    busybee100 Posts: 1,554 Forumite
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    jamesd wrote: »
    The 25% tax free lump sum is always tax free. The 75% depends on personal allowance being available.

    Your friend could pay in gross of that around 12k a year then take out the 25% tax free lump sum each year.

    Since she's still working sure wouldn't want to take out any of the 75% because that would cause her to be restricted to paying in only 4k gross a year after doing it. The workaround for this is the small pot rule. The 75% from a small pot doesn't cause that reduction to 4k. So she can pay in 10k gross then take it out using the small pot rule. Then she can pay in the remaining 2k this tax year. Next year she adds another 8k and takes that combined 10k as another small pot. Adds another 4k during that tax year to get to the 12k paying in max and in the next tax year pays in another 6k and takes the last of the three small pot rule pots that she's allowed to take in her lifetime.

    Hi jamesd or anyone else who can help.

    Is using the small pot rule in this instance to give her more chances to get at the 25% without limiting future contributions?

    I doubt her future contributions would ever exceed 4k gross although once she understands how with some financial planning it could be more lucrative it should be possible.

    As an aside how much should an IFA charge for overseeing an arangement of this sort? I'm worried I'm going to miss something vital.

    Thank you for all your help.
  • xylophone
    xylophone Posts: 45,615 Forumite
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    Is your friend already contributing to a pension with her employer (and/or elsewhere)?
  • busybee100
    busybee100 Posts: 1,554 Forumite
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    Hi xylophone. No she hasn't, she's just had small part time jobs while married and having to fend for herself now.
  • xylophone
    xylophone Posts: 45,615 Forumite
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    edited 23 January 2017 at 12:25PM
    Has your friend obtained a new state pension statement?

    https://www.gov.uk/check-state-pension

    This will help her planning.

    Regarding a private pension

    https://www.moneyadviceservice.org.uk/en/articles/tax-relief-on-pension-contributions

    Remember that she will make net contributions into the pension scheme - the pension provider will then claim the tax relief.


    Does she want to build a pension pot that she will not call on until she gives up paid work?
  • neilvw
    neilvw Posts: 462 Forumite
    edited 22 January 2017 at 11:31PM
    busybee100 wrote: »
    Hi jamesd or anyone else who can help.

    Is using the small pot rule in this instance to give her more chances to get at the 25% without limiting future contributions?

    I doubt her future contributions would ever exceed 4k gross although once she understands how with some financial planning it could be more lucrative it should be possible.

    As an aside how much should an IFA charge for overseeing an arangement of this sort? I'm worried I'm going to miss something vital.

    Thank you for all your help.

    You can take 25% tax-free cash under drawdown without limiting your money purchase annual allowance to £10k (likely £4k from April after Govt consultation which ends 15 Feb).

    It's only if you take any of the 75% 'income' part that the MPAA cut is triggered. That applies to income taken under Flexible Access Drawdown; UFPLS (a kind of full cash-in); but not when using small pots rules (up to 3 x £10k).
  • jamesd
    jamesd Posts: 26,103 Forumite
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    Busybee100, that's right.
  • Just looking for confirmation that the rates for a SIPP in 2017/18 is still £2880 net grossed up by £720.
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