Continuing To Work

RPWJ

The opportunity has arisen to take early retirement and start working for another employer doing the same job. Is the only option for reducing tax bill to start paying into another pension?

AnotherJoe

Does "taking early retirement" mean you have to take your pension? Could you defer it? What happens if you do?

RPWJ

Frozen and not available until state retirement age.

xylophone

Frozen and not available until state retirement age.

Deferred rather than frozen?

Is this a Defined Benefit Scheme?

https://www.barnett-waddingham.co.uk/comment-insight/blog/2012/07/24/revaluation-for-early-leavers/

Have you obtained a new state pension statement?

https://www.gov.uk/check-state-pension

Contributing to your new employer's pension scheme should give you an employer's contribution and tax relief on your contributions.

Do you expect to be a higher rate tax payer?

AnotherJoe

RPWJ wrote: »

Frozen and not available until state retirement age.

OK, then your options to pay less tax are;
1. Put more money in pension
2. Earn less

RPWJ

xylophone wrote: »

Deferred rather than frozen?

Is this a Defined Benefit Scheme?

https://www.barnett-waddingham.co.uk/comment-insight/blog/2012/07/24/revaluation-for-early-leavers/

Have you obtained a new state pension statement?

https://www.gov.uk/check-state-pension

Contributing to your new employer's pension scheme should give you an employer's contribution and tax relief on your contributions.

Do you expect to be a higher rate tax payer?

Combined salary and pension will be around £63,000. I read something about new pension contributions being limited if you already receive one.

xylophone

You have a defined benefit pension and will be able to access it immediately you leave (won't be required to leave it in deferment until SPA)?

Drawing a DB Pension will not make you subject to the MPAA - is this what you mean?

RPWJ

xylophone wrote: »

You have a defined benefit pension and will be able to access it immediately you leave (won't be required to leave it in deferment until SPA)?

Drawing a DB Pension will not make you subject to the MPAA - is this what you mean?

Yes to first question. i don't know it's all very confusing. i think i'll need to sit down with some kind of expert that explains it in words of very few syllables and even fewer abreviations.

xylophone

If a person has a money purchase/defined contribution pension and accesses anything above the pension commencement lump sum, he is limited to £4000 pa contributions (the Money Purchase Annual Allowance) to any other DC pension.

You expect to draw a defined benefit scheme pension and so will not be affected by this restriction.

With a pension plus salary of £63,000 per annum, you will be a higher rate tax payer.

Pension income is not relevant earnings - you will be limited as to tax relieved pension contributions by your salary in the normal way and by the annual and lifetime allowance in the normal way.

https://www.pensionsadvisoryservice.org.uk/content/spotlights-files/uploads/Lifetime_Allowance_SPOT021_V3.0.pdf

https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/annual-allowance/

You may need to contact HMRC concerning higher rate pension tax relief.