Paying £2880 into pension when retired

masca

Great thread!! 😀

OH will on 21/01 have c£11k in an HL SIPP and is ready to withdraw it all (no other income this year, barring interest). Plan is to take a first UFPLS withdrawal of £1390, so as to avoid an emergency tax code being allocated, and then a second UFPLS before the end of the tax year to leave a balance of just £50. The HL online risk questions have been answered and the pack is in the post.  Questions are:

1. Is £1390 correct for first payment?
2. Will a second payment of c£9500 be paid without any tax being taken?
3. Is there any way to complete the UFPLS withdrawals online with HL, rather than faffing with post (some posters state that they have achieved this, but I can't see any details of how).

TIA!!

masca

Extra question, about me this time!  I'm a little way off 55 (or as it will be 57/58/?!) yet, and expect income to remain very low (living off savings, and possibly some modest future rental income). In this situation, at what age did people start contributing their annual £2880, with an aim to withdrawing it all tax free ASAP after reaching the magic birthday?  I feel that perhaps the balance comes at about 50 with an aim to continue contributing, but having withdrawn it down to zero tax free by c60?  What did others in a similar situation decide to do? TIA again!

QrizB

masca said:

Extra question, about me this time!  I'm a little way off 55 ... at what age did people start contributing their annual £2880

If you personally have no existing pension (or only a very small pot), and as a household you have £2880 that you aren't going to need until you reach your minmum pension age, I would suggest that you start as soon as you can. Like, now. Put £2880 into a pension in you name before April 2026.

molerat

1. Yes - actually £1397 but close enough.

2. Depends on the tax code allocated and when in the tax year taken.  If the full 1257 cumulative code. something you would need to double check on, is allocated the total remaining £7208 taxable amount would be available immediately with no tax being deducted.

3. No, unfortunately not.  Regular drawdown is seemingly available on line but not UFPLS.

masca

molerat said:

3. No, unfortunately not.  Regular drawdown is seemingly available on line but not UFPLS.

How frustrating!  My reading to date has been mostly regarding UFPLS withdrawals.  Is there any real disadvantage to using two drawdowns instead, if that's even possible in this situation?  They'll be no withdrawals from any other pensions for 10+ years, and they're only very small pensions anyway.  There's already a nominated account in the HL online system, if that makes any difference.

Dazed_and_C0nfused

masca said:

Great thread!! 😀

OH will on 21/01 have c£11k in an HL SIPP and is ready to withdraw it all (no other income this year, barring interest). Plan is to take a first UFPLS withdrawal of £1390, so as to avoid an emergency tax code being allocated, and then a second UFPLS before the end of the tax year to leave a balance of just £50. The HL online risk questions have been answered and the pack is in the post.  Questions are:

1. Is £1390 correct for first payment?
2. Will a second payment of c£9500 be paid without any tax being taken?
3. Is there any way to complete the UFPLS withdrawals online with HL, rather than faffing with post (some posters state that they have achieved this, but I can't see any details of how).

TIA!!

With a pension fund of ~£11k she cannot avoid the emergency tax code (1257L) from being used on the first payment.

That is the reason £1,397 can be taken as a first payment using UFPLS as the £1,048 taxable element has tax calculated using the emergency tax code.  No tax needs to be deducted from £1,048 when tax code 1257L is used.

masca

Thanks for the replies.  A first UFPLS withdrawal of £1,397 results in 5p of tax according to the HL online calculator, and hence I rounded down. 😀

Could anyone please briefly say why UFPLS is preferable to drawdown for the withdrawals?  I've done some reading but I'm still unclear, as a drawdown lump sum (or two in my case) would seem to be pretty similar to a UFPLS withdrawal?  I do prefer to do things on line wherever possible.  Many thanks.

MK62

masca said:

Thanks for the replies.  A first UFPLS withdrawal of £1,397 results in 5p of tax according to the HL online calculator, and hence I rounded down. 😀

Could anyone please briefly say why UFPLS is preferable to drawdown for the withdrawals?  I've done some reading but I'm still unclear, as a drawdown lump sum (or two in my case) would seem to be pretty similar to a UFPLS withdrawal?  I do prefer to do things on line wherever possible.  Many thanks.

Not sure about "preferred".......they are both variations on the same theme.......similar outcome, slightly different operation.

Personally I wouldn't be over worried about any tax though......an online P55 claim would usually see it reimbursed in c.4-6 weeks.......I'd probably just take it all now as a single UFPLS, and just claim the tax back.

zagfles

masca said:

Thanks for the replies.  A first UFPLS withdrawal of £1,397 results in 5p of tax according to the HL online calculator, and hence I rounded down. 😀

Could anyone please briefly say why UFPLS is preferable to drawdown for the withdrawals?  I've done some reading but I'm still unclear, as a drawdown lump sum (or two in my case) would seem to be pretty similar to a UFPLS withdrawal?  I do prefer to do things on line wherever possible.  Many thanks.

They are pretty similar, probably the main issue is what is administratively easier, and with HL that is likely to be drawdown. So you could crystallise the £11k, take the full £2750 TFLS, and then drawdown £1048 or less as the first DD in Jan or Feb and the rest in March. 

Note that the MPAA will be triggered whichever way you go.