Paying £2880 into pension when retired

Deneb

jerrysimon wrote: »

I dont recall ANY fees from HL as long as you keep a min of £1000 in the draw down account for 12 months ?

For the purposes of what's proposed in this thread, there are no practical charges. But the HL SIPP does have some charges, such as a £75 fee for each GAD calculation, so it would have been incorrect to say that their SIPP has no fees whatsoever.

I agree that for small pots and what is being discussed in this thread, HL are one of the cheapest available, i.e. no charges.

Close Bros, according to their website, would charge £50 + VAT to set up drawdown, a £75 + VAT annual admin fee, and £50 + VAT for each and every UPFLS payment. I'm no maths genius, but I'm pretty sure that's a lot more than nothing.

Joey_Soap

pip895 wrote: »

No one is arguing that you can't save considerable sums with a large pot but we are talking about a very small pot here, and HLs customer support and website are difficult to beat.

Yes, for a very small pot held in cash, I guess you are right.

skycatcher

jerrysimon wrote: »

I dont recall ANY fees from HL as long as you keep a min of £1000 in the draw down account for 12 months ?

PS I had a cash only SIPP as I drew out the money after 12 months to gain the tax benefit.

I just started mine yesterday and as I get my DB pension in Nov 19 I intend to put the next £2880 in early next tax year and then when the £720 is added by the tax man to start drawing it all out before the 19/20 tax year starts. I had thought that by opening it in Feb 18 that I would be able to close it next march 19 and only incur the £25 plus vat charge but are you saying there is a closing fee also on the drawdown account? I could take it all out in one go as I'm a non tax payer next year if that was a cheaper way to go.

jerrysimon

Yes that is my understanding when I spoke to them i.e. once in draw down the account must be kept open with £1000 for at least 12 months before you close it or you will incur a charge. To confirm just phone them they answer the phone quickly and are always very curtious and helpful.

skycatcher

jerrysimon wrote: »

Yes that is my understanding when I spoke to them i.e. once in draw down the account must be kept open with £1000 for at least 12 months before you close it or you will incur a charge. To confirm just phone them they answer the phone quickly and are always very curtious and helpful.

Thanks for that. Just so I'm clear when you start drawdown that is that start of the 12 month period and not when you opened the account for putting in cash?

malta1919

Hi, I'm 65 in April, and will be taking my state pension, I hope to carry on working for at least a couple of years in my present minimum wage job.
I have a private pension with the company, not final salary which isn't a lot, currently less than 30k.
My question is, I fortunately don't have to rely on my state pension while I'm still working, as I will be paying 20% tax on it does it make sense to put the majority of it in my works pension and get tax relief on that?
Sorry if it's a basic question for some.

LXdaddy

malta1919 wrote: »

...My question is, I fortunately don't have to rely on my state pension while I'm still working, as I will be paying 20% tax on it does it make sense to put the majority of it in my works pension and get tax relief on that?

If you don't need your state pension you should probably consider deferring taking it. Each year of deferral adds 5.8% to it's value when you eventually take it.
(Those who reached state pension age before April 2016 gain 10.4% per year which makes it a no brainer for me.)

pensionpawn

LXdaddy wrote: »

If you don't need your state pension you should probably consider deferring taking it. Each year of deferral adds 5.8% to it's value when you eventually take it.
(Those who reached state pension age before April 2016 gain 10.4% per year which makes it a no brainer for me.)

Or, if an option, take your state pension and salary sacrifice the majority of your pay into your personal pension gaining the tax relief and possible reduction in NI?

Audaxer

jerrysimon wrote: »

Yes that is my understanding when I spoke to them i.e. once in draw down the account must be kept open with £1000 for at least 12 months before you close it or you will incur a charge. To confirm just phone them they answer the phone quickly and are always very curtious and helpful.

If you are taking out lump sums, as far as I know the SIPP doesn't have to be in drawdown, you can draw the money as UFPLS lump sums. In these cases I'm not sure you need to keep as much as £1,000 in an HL SIPP. I think you may be able to only leave £100 in it to keep the SIPP open.

jerrysimon

skycatcher wrote: »

Thanks for that. Just so I'm clear when you start drawdown that is that start of the 12 month period and not when you opened the account for putting in cash?

From what I recall I had to move the money from my wifes cash only SIPP into a draw down account/facility 1/4/17 and that was when I was told that if I emptied all of that within 12 months there would be a £250 charge. To avoid the charge I needed to leave at least £1000 in the draw down account for at least 12 months after which I could empty it without charge.

The cash SIPP was then closed without charge, but I asked them to reopen it as I plan like you to keep putting the £2880 in to gain the £720 tax refund. We do in fact still have 4K left in the draw down account as I needed to leave that there as I drew out the max including the 25% so as not to go over her personal allowance. I will draw this out after 1/4/18 but of course that will be beyond the 12 months, then do the same again with the money I put in before the end of this tax year leaving £1000 in beyond 1/4/19 to avoid any charges.

I will probably need to double check with HL to make sure I have that correct. As I said their advice line is excellent and they are patient and very helpful for us amateurs i.e. I only found out about this 2 years ago when I came on this forum.