Paying £2880 into pension when retired

AnotherJoe

DeepSporran wrote: »

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

Ah, good point. Well there's no harm in keeping it open and seeing what happens you'd be no worse off. Or, keep a "float" of £1k in there while you are doing this, perhaps as a low risk investment even since that could be invested for ten years or so.

I hate form filling, its bad enough the hoops you have to jump through on the telephone (or on a form) when you cash in your [STRIKE]15%[/STRIKE] 25% of the £3,600 than starting a whole new SIPP.

stehouk

Can somebody explain to me why I get 25% added to my sipp contributions when all I read is that I will have 20% eg: £2,880+20% = £3,456, £2880+25% = £3600 is my my maths really that bad ?

Apodemus

You are paying the equivalent of the after-20%-tax sum in. So if you had earned £3,600 and been charged basic rate tax, you would have 8/10 or 80% or £2880 after tax. Reversing all this, if you pay in £2880, you get a total of 10/8 or 125% of the £2880, which is £3600.

The fact that you may never have paid any tax on the £2880 in the first place is irrelevant. Look on it as a gift from the Government!

stehouk

Thanks Apodemus so it is my maths. never been my strong point.

Mick-H

AnotherJoe wrote: »

Ah, good point. Well there's no harm in keeping it open and seeing what happens you'd be no worse off. Or, keep a "float" of £1k in there while you are doing this, perhaps as a low risk investment even since that could be invested for ten years or so.

I hate form filling, its bad enough the hoops you have to jump through on the telephone (or on a form) when you cash in your [STRIKE]15%[/STRIKE] 25% of the £3,600 than starting a whole new SIPP.

I moved my pension from Zurich to Pension Bee because of all the form filling.
With Pension Bee you answer around 10 yes no questions press a button 2 weeks later your money is in the bank.
Couldn't be happier.

akh43

I am trying to figure out if this is worth doing in my circumstances. I have been trying to wade through the posts, but so much to read. I took early retirement @ 60 in March and get my DB monthly work pension of £1,079.32 and pay £7.40 tax. How would this work for me and what would the benefits, if any be? Thanks

PennyForThem_2

You have retired on a DB pension which is great!

If you want to take advantage of paying £2880 and getting the Government to contribute then you need a Self Invested Pension Plan (SIPP).

I st one up several years ago for the free Gov money while I was working and contributing to DB NHS pension because my salary was low enough to give me leeway.

Suggest you ask the Board what they would advise for setting up a SIPP in retirement as HMRC only allows you to contribute 2880 if not working.

However.......if you have part time work then you may be able to contribute more.... Suggest you ask - maybe new thread?

Crabby

As a tax payer, if you recycle it every year it's £180 free cash for you.


Pay £2880 into a SIPP, it's topped up by £720 to £3600. Draw it all down, 25% tax free (£900), £2700 taxed at 20% (£540 tax). £720 - £540 = £180 free cash.
Same again the next year till you are 75.

akh43

Crabby wrote: »

As a tax payer, if you recycle it every year it's £180 free cash for you.

Pay £2880 into a SIPP, it's topped up by £720 to £3600. Draw it all down, 25% tax free (£900), £2700 taxed at 20% (£540 tax). £720 - £540 = £180 free cash.
Same again the next year till you are 75.

Thanks for the information. Is there any best/easiest/cheapest SIPP provider I should use? Do I just transfer the £2880 from my income/savings? When I draw down do I have to leave any money in the SIPP as I recall reading something on the thread about that to avoid charges with HL but it was on the early pages? It is taxed automatically when I draw it down? Do I still pay the same tax on my income or does doing this affect it?

Malchester

Mick-H

I have just done the same. Have two DB pensions, an LGPS one that started when I was 60 last year and another due in 5 years. But also just retired early and the DC pension with latest company was with The Pension Trust with little flexibility on taking the pension (withdraw all or annuity). So transferred to PensionBee. Took a long time because of PensionBee delaying things but now all set up. Non taxpayer (until receive other pension) so Can contribute £2880 a year topped up by £720 from government. Very simple to withdraw money.