Paying £2880 into pension when retired

Rob749

Thanks for the reply. I have the letter with the UTR on it, and can log in to her Personal Tax account on Gov Gateway, but then there are no links or forms on there to fill in, just her income, tax details etc. As I mentioned, I found a link to register for self assessment, which said I would get a code in the post in 10 days, but all that did was create another Gateway account with a different log in, that takes you to the same place as before, no mention of anything being sent through the post at the end of it. All I got was the access code again on my mobile as before. Really frustrating !

jingleberry

Thanks to the helpful info on here i've convinced myself that I should invest £2880 pa in a Hargreaves Lansdown SIPP, withdraw £900 pa as a tax free lump sum and invest the rest. I'm aged 61, a 40% tax payer with a defined benefits pension of approx £57K pa, another small pension taken as an annuity and paying £500pa, plus earned income of about £2000 pa and investment income outside ISAs of just below £500 pa (ie tax free). Im trying to get to grips with the rules of defined benefit pensions and the lifetime allowance. When I retired aged 51 10 years ago my defined benefits pension was £43K pa and I was told that it would use up 56% of the lifetime allowance. Since then the allowance has gone down and my pension has gone up. Do I need to be worried about exceeding the lifetime allowance, either now or when I reach 75? Any help would be appreciated.

zagfles

jingleberry wrote: »

Thanks to the helpful info on here i've convinced myself that I should invest £2880 pa in a Hargreaves Lansdown SIPP, withdraw £900 pa as a tax free lump sum and invest the rest. I'm aged 61, a 40% tax payer with a defined benefits pension of approx £57K pa, another small pension taken as an annuity and paying £500pa, plus earned income of about £2000 pa and investment income outside ISAs of just below £500 pa (ie tax free). Im trying to get to grips with the rules of defined benefit pensions and the lifetime allowance. When I retired aged 51 10 years ago my defined benefits pension was £43K pa and I was told that it would use up 56% of the lifetime allowance. Since then the allowance has gone down and my pension has gone up. Do I need to be worried about exceeding the lifetime allowance, either now or when I reach 75? Any help would be appreciated.

Doesn't sound like it. I presume you started drawing your DB pension 10 years ago? In which case it would have crystallised then, and used up a percentage of your LTA then at the high amounts it was then. Unless you get above inflation increases on the DB pension it won't use up any more of the LTA.

The annuity would have used up a bit more LTA, but not much by the sounds of it. You should have the total % of the LTA you've used on your statements somewhere.

You have really fallen lucky with timings and rules here. Someone getting similar levels of pension now, or from DC, would be way above the LTA.

jingleberry

Aha yes now I think I understand. The percentage lifetime allowance used crystalises on first drawing and will not change, regardless of what may happen to the overall allowance in the future. Yes I started drawing 10 years ago, and my payments rise with RPI so I'm assuming the inflation increases I have received over the years will not impact either. Many thanks for your reply zagfiles.

nxdmsandkaskdjaqd

I used this process last year and have now started for this tax year. Will the HMRC tax code that was used last tax year be used this tax year?
I am a non tax payer.

missile

nxdmsandkaskdjaqd wrote: »

I used this process last year and have now started for this tax year. Will the HMRC tax code that was used last tax year be used this tax year?
I am a non tax payer.

HL will use the same tax code unless HMRC decide to change it.

In their infinite wisdom HMRC have decided that I might be a higher rate tax payer and reduced my allowance ………. :mad:

Mothman

Does anyone know where the £1000 min balance needs to kept in a HL SIPP to avoid the early closure charge. Is it OK to leave say £100 in the SIPP account to keep it open and as long as you leave £1000 in the Drawdown account you will avoid the early closure charge or do you effectively need to leave £1000 in both SIPP & Drawdown accounts i.e. £2000 total for the first year?

parcival

I moved my SIPP into a drawdown account almost immediately so it has a zero balance. The drawdown account has about 10k in it and reducing. No early closure charge was levied when I moved from SIPP to drawdown.....

caveman38

My wife who has a cash SIPP and plans to retire 9 months ahead of SPA. She plans to take her TFLS and a withdrawal which together with her 3 months of SP will be within her tax allowance for the year. She intends to top that up with savings to give her a final fiure of approx. £18,000.
From the following year her plan was to draw approx. £3,750 which together with her £8,750 SP will be within the 12,500 tax allowance for 19/20.
After taking TFLS and large withdrawal her SIPP will be worth say £50,000 and although not increasing year by year will last 15 years ish.
If she decided to take advantage of the 2880/3600 idea for retired persons. She could withdraw £2,880 from savings to pay the SIPP, gain the £720 PIRAS and withdraw £4,650 from the scheme and still be within her tax allowance as £900 would be another TFLS (assuming that's what you call it when in drawdown)
The dilemma I that if she did go with the additional tax free plan, she would effectively only be withdrawing a little over £1,000 per year. Her savings would diminish quicker but her SIPP would last forever unless she was happy paying tax on larger withdrawals.
Assuming this makes sense, is there an alternative to her plan?

Dazed_and_confused

Can't follow your figures.

I though the £3,750 was all taxable (added to £8,750 = £12,500) but should be within Personal Allowance.

But then when you get to £4,650 £900 is suddenly tax free.

What type of withdrawal is she making in each situation?

It also sounds like she has significant savings. Is this in an ISA or will she be able to get better rates on taxable accounts coupled with use of the savings starter rate of tax where up to £5,000 of taxable interest is taxed at 0%?