Paying £2880 into pension when retired

sparkiemalarkie

Hi I have a very small Teachers pension and have been receiving Carers Allowance over the last financial year.


I have paid in £2880 to HL sipp and that has been made up to £3600


Can I pay in any more to my SIPP ?
I received £3260.4 Carers Allowance and
£207.48 for 2 day supply Teaching (£280 - £51.80 tax - £20.70 TP contribution)


many thanks


sparkie

Oddjob

I need some help to get my head around this before I take the plunge.

I am on low earnings but last year because of ill health, I had to start taking my deferred SP, plus another little private pension which at the moment I actually give straight to a charity. I also get enhanced WTC as I am on PIP
I haven't worked the full figures out yet by I think that my earnings plus pensions will be probably £1000 - £2000 over my PA.
Next year however, my earnings are going to drop substantially I think and I probably won't be over my PA.
If I open a HL cash Sipp with £2880 and get the £720 tax relief. I know I can draw 25% tax free.
I might need the rest of the money at some time within the next year or two to purchase a car, or put towards one so I don't want to tie it up too much.
I obviously won't be able to draw the other 75% anyway until the next tax year (2018/2019), when I am earning less, so if I draw on this other money, leaving at least some in to keep the account open, would I still have to pay tax on it? Or will the fact that I paid it in when I was liable for tax mean I would still get charged the tax on it?

The money at the moment is not earning any interest, I have no savings that are earning interest, it is just left in my current account. If I wanted to draw it out from the SIPP and put it in an ISA or something would I get taxed on it then? As I say, whatever I do with it, I don't want it being tied up and unable to be withdrawn as I know I will need it for a car at some stage.

As another poster has said above though, if I pay that £2880 into the SIPP, would that be deducted as useable income and take me below the PA anyway for this year as long as the earnings plus pension drawn were not more?

I would really appreciate your advice before I do this.

Terron

sparkiemalarkie wrote: »

Hi I have a very small Teachers pension and have been receiving Carers Allowance over the last financial year.


I have paid in £2880 to HL sipp and that has been made up to £3600


Can I pay in any more to my SIPP ?
I received £3260.4 Carers Allowance and
£207.48 for 2 day supply Teaching (£280 - £51.80 tax - £20.70 TP contribution)


many thanks


sparkie

The gross contrubution you xan make is limited to your relevant earnings with a minimum of £3600 and a maximum of £40k. It looks like you haven't earned enough to contribute more than £3600.

Dazed_and_confused

Oddjob

so if I draw on this other money, leaving at least some in to keep the account open, would I still have to pay tax on it? Or will the fact that I paid it in when I was liable for tax mean I would still get charged the tax on it?

Tax will be due based on your total taxable income in the year you make the taxable, not TFLS, SIPP withdrawal. When the first taxable payment is taken from the SIPP you are likely to pay tax on anything over £988 (if it's taken in the 2018:19 tax year) but you may be due some of this tax back, or might owe more, depending on your overall tax position for the year.

As another poster has said above though, if I pay that £2880 into the SIPP, would that be deducted as useable income and take me below the PA anyway for this year as long as the earnings plus pension drawn were not more?

Paying into a SIPP with basic rate tax relief added by the pension company does not make any difference to your taxable income and for most people it does not alter their personal tax position at all. You usually need to be a higher rate payer or claiming Married Couple's Allowance for it to impact your personal tax.

twiglet98

xylophone wrote: »

Pension Wise offers guidance on DC pensions.

My mistake, their booklet was sent to me by Scottish Widows for the Clerical Medical scheme, not L&G. They also sent their own booklet which recommends finding an IFA through Unbiased.

The PAS offers help with matters relating to pensions.

https://www.pensionsadvisoryservice.org.uk/?utm_expid=.Luj1oalXTTyNdDX8FdnnpA.0&utm_referrer=https%3A%2F%2Fwww.google.co.uk%2F

With regard to your DB pension, it appears that payment of your pension has been deferred by default because you did not contact the administrator when you were about to reach Scheme Pension Age.

If you make a large a payment as possible into a SIPP with HL before 6 April, you should find that the tax relief is added in May.

You could also ask them about a transfer in of the DC pension.
Move it across as it is, so all the current amount (£34k) would go straight into the HL SIPP - could CM penalise me for doing this? It would be added to the £2880 which opened the SIPP?

The final letter from work gives contact details of the Pension Provider for the company scheme, he is listed on Unbiased as an IFA but I don't see how the person who set us up in the company scheme originally is really independent.

You could then commence drawdown as suits you best - you can read about it or book an appointment with Pension Wise.

You might have say a PCLS of around £10,000 from a combination of your transfer in and your contribution and in addition to this a lump sum from your DB pension.

It seems that you have been managing on a salary of £18000 a year - the above lump sums together with your DB pension could keep you going for a couple of years.
I've kept my head above water on a pretty low income but Council Tax at over £2k/pa is the one thing I can't trim down.

You could then draw down your SIPP as suited your tax position up to state pension age.

Even if you do not start earning again, you can continue to contribute up to £2880 a year to the SIPP up to age 75 and receive the £720 tax relief.

Don't forget that if you are job searching, you can apply for JSA.
It does look as if I should qualify for JSA and then my NI credits will be kept up until I start another job.

Thank you, I'm learning, better late than never.

xylophone

The final letter from work gives contact details of the Pension Provider for the company scheme, he is listed on Unbiased as an IFA but I don't see how the person who set us up in the company scheme originally is really independent.

He is not the pension provider he is the financial adviser who acted as an intermediary between your employer and Clerical Medical/Scottish Widows when you joined the company DC scheme?

Have you checked with SW whether there is any charge for transferring out?

If you wished to transfer out you would ask HL /your new provider to arrange the transfer.

This would give you whatever you have contributed to the SIPP plus tax relief plus the transferred in pension.

You could then take the PCLS from the SIPP and leave the balance invested or as cash as seemed best to you.

It would seem that this PCLS plus the PCLS from your DB pension plus your monthly DB pension could potentially keep you going for a couple of years? If the monthly pension were your only income in the next tax year you would not be paying any tax.

You could also put in a claim for conts JSA?

If you use up your capital from PCLS on living costs and remain on a low income, would you be entitled to any council tax rebate?

xylophone

Another thought, once you start taking income (not the PCLS) from the DC pension/SIPP, you will be affected by the MPAA.

This would not prevent your contributing the £2880 per annum discussed in previous posts.

It could potentially affect the amount you could contribute to a new employer's pension scheme.

http://www.scottishwidows.co.uk/Extranet/Literature/Doc/FP0617

twiglet98

xylophone wrote: »

He is not the pension provider he is the financial adviser who acted as an intermediary between your employer and Clerical Medical/Scottish Widows when you joined the company DC scheme? I doubt my former managing director knows the difference!

Have you checked with SW whether there is any charge for transferring out? Not yet, do I ask them directly or should questions go through the employer's financial adviser?

If you wished to transfer out you would ask HL /your new provider to arrange the transfer. Like switching a current account?!

This would give you whatever you have contributed to the SIPP plus tax relief plus the transferred in pension.

You could then take the PCLS from the SIPP and leave the balance invested or as cash as seemed best to you.

It would seem that this PCLS plus the PCLS from your DB pension plus your monthly DB pension could potentially keep you going for a couple of years? If the monthly pension were your only income in the next tax year you would not be paying any tax.

You could also put in a claim for conts JSA? I will apply for this to maintain NI credits.

If you use up your capital from PCLS on living costs and remain on a low income, would you be entitled to any council tax rebate? Possibly not while my youngest (adult) daughter still lives at home and is working full time, but maybe an option for the future.

xylophone wrote: »

Another thought, once you start taking income (not the PCLS) from the DC pension/SIPP, you will be affected by the MPAA. Something else I didn't know about. I've read the link but need to absorb and understand what I'm getting into.

I so appreciate your thoughts, thank you very much. Lots of questions ready for a series of phone calls!

xylophone

Presumably SW have provided you with a contact number - you could make an initial enquiry about whether there is any fee to transfer out.

https://www.pensionwise.gov.uk/en/transfer-pension

tempus_fugit

missile wrote: »

I did it online easy :j

Same here, it was simple, took 5-10 minutes and the rebate was through within a few weeks. I wouldn't bother trying to phone HMRC.