Paying £2880 into pension when retired

Clive_Woody

cloud_dog wrote: »

You can do that if you wish. It would only cost you £4.50pa based on £1k in the account.

I think most people use this method to extract the maximum but for £4.50pa cost it is neither here nor there.

And realistically the fund should increase in value by more than this amount.

Audaxer

JuliusCaesar wrote: »

Yes, I have just set up an account with HL. I am happy to leave £1000 invested in a fund indefinitely, even though this may not be strictly necessary, as I can afford it and am not averse to the risk. The main issue is whether there are any disadvantages of doing this that I am not aware of, when the main purpose of having the SIPP is to generate an additional income of £180 p.a.

If you invest the remaining £1,000 in the SIPP, as well as fees, the value could drop below £1,000 in the short or medium term if there is a crash. While that may not be a big concern from a risk point of view, I am not sure whether HL will keep the SIPP open if the value drops under £1,000?

kgmiser

Hi James, I have a HL Sipp to utilise the HMRC £720 on my yearly £2880 pension but I have just gone to withdraw my first amount and HL are offering Flexi-access or Ufpls any idea which is best? I am retired and currently receive a £12000 pa pension.

jamesd

I suggest spreading the paying in over a year and the same for the taxable income. Then the monthly income almost covers the monthly direct debit and the only annual work is taking the tax free lump sum. A bit less taken first year to create a few months of extra payments before running out of money in the drawdown account. Removes the time pressure around the start of the new tax year, making an easier life.

Flexi-access is the one to choose to do it this way.

PT18

Hi All, I'm still somewhat confused as to what to do with a H&L Sipp. I am still working (68 Yrs) both my wife and I draw a state pension and I have a company pension from an ex employer I also draw, so we don't currently need the income.
However some 5 years ago I set up a H&L sipp in my wife's name when she retired (no company pension) the account now has a balance of £18000 held in cash (I have put in the £2880 every April for 5 years.
My wife's only income is her state pension of £8364 p.a. A couple of years ago I enquired with H&L re drawing from it but as I understood them this meant closing that account and setting up another ???
Do I have that wrong? I don't particularly like leaving the cash there doing nothing and had intended to keep putting the same in every year until the wife is 75 (or the Gov changes the rules)She is now 67 next month. Any suggestions would be appreciated please

xylophone

Your wife could take the 25% Pension Commencement Lump Sum from the SIPP and then start drawdown if she wishes.

If she wants to contribute her £2880 in the next tax year, she just has to ask HL to "re-open" the account - the tax relief will be added in due course in the usual way.

She could then take another PCLS from the "reactivated" SIPP and draw down down/leave in cash/ invest as required.

She can follow a similar process in subsequent tax years.

https://forums.moneysavingexpert.com/discussion/60376112 post 21.

drumtochty

[FONT=&quot]Your wife can earn £12,500 of taxable income without paying tax. Therefore there is an argument that she should be taking out £4,200 or so taxable income per year from the SIPP and put it in savings or a S&S ISA.[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]When you want to do that, HL set up a drawdown account and assuming you want the cash out of the pension, you crystallise all but say £500 of what is in your SIPP to your SIPP drawdown account. That means the original SIPP is still open and you can easily pay in your annual £2,880 to the SIPP.[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]Otherwise you have to phone HL every year and ask them to reopen the SIPP account.[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]Your wife can then put her Tax Free money and this tax years taxable money in savings or a S&S ISA.[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]Next year she can take another taxable £4,200 or so taxable from the draw down account and save it.[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]That is assuming you do not leave it in there for Inheritance tax purposes.[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]I will not advise how the money should be invested.[/FONT]

jamesd

The HL early account closure charge of £295 in the first year and account closure charge of £25, both plus VAT, were removed on 19 September 2019.

AnotherJoe

jamesd wrote: »

The HL early account closure charge of £295 in the first year and account closure charge of £25, both plus VAT, were removed on 19 September 2019.

Although it will be easier to leave a small amount of money in it from one year to the next to save the faff of starting a new SIPP when you can instead reopen it with one phone call.

DeepSporran

AnotherJoe wrote: »

Although it will be easier to leave a small amount of money in it from one year to the next to save the faff of starting a new SIPP when you can instead reopen it with one phone call.

I hope so. However, the updated T&Cs applicable from October 1st still refer to the possibility of any account with less than £1000 in it being closed (albeit the closure fee would presumably be zero.)

I checked the T&Cs on this page :

https://www.hl.co.uk/terms-and-conditions