Future contributions to Flexi draw down pension fund

royalpalmbay

I crystallised my defined contribution fund in January 2017 by taking a tax free 25% lump sum, but I do not intend to start drawing any further income (which will all be taxable) from the fund for a few years. I want to continue contributing into the fund but I am unclear of the maximum amount I can pay in each year.

I am aware of the £10,000 cap once the fund is crystallised, and that this was possibly going to reduce to £4,000 after 5th April 2017. Has this reduction been confirmed in the 2017 Budget?

However, because I have not yet taken any taxable income does the cap (whether it is £10k or £4k) not yet apply and therefore the normal annual allowance of £40k still applies?

Any help to understand my position would be much appreciated.

xylophone

https://www.aegon.co.uk/support/faq/pension-technical/MPAA.html

robber2

Sadly it has today been confirmed in the budget small print that the MPAA will be cut from £10K TO £4K.

The cap DOES apply to you as whether you take any income or not you have put your DC pension into drawdown.

Bit of a b*gger isnt it, I'm in the same position as you BTW.

Rob

coyrls

robber2 wrote: »

Sadly it has today been confirmed in the budget small print that the MPAA will be cut from £10K TO £4K.

The cap DOES apply to you as whether you take any income or not you have put your DC pension into drawdown.

Bit of a b*gger isnt it, I'm in the same position as you BTW.

Rob

I don't think this is correct, as I understand it the cap applies once you have taken taxable income from a pension, if all you have done is crystalise and take the PCLS, the cap does not apply.

Confirmed in the link porvided by xylophone, the cap does NOT apply when:

Taking a pension commencement lump sum, and

• buying a lifetime annuity (i.e. not accessing new flexible annuity options), or
• moving to a flexi-access drawdown arrangement and taking NO income.

robber2

coryls,

thanks for pointing out my error, you are of course quite right, I had missed the '....and taking no income' clause.

You've made my day :-)

Rob

royalpalmbay

Thanks very much everyone - very helpful.