Hell understanding drawdown and

foxhat2

Hello , I would appreciate some help understanding .
If I put all of my small pension into drawdown to obtain the 25% TFLS - can I still continue as usual paying into this pension at work and obtain the same contributions from them?
Or does drawdown affect my pension in other ways ? It just continues as usual ?

Hope I’m making sense, thanks for any clarity anyone can offer me

Albermarle

If you just take the TFLS and leave the remaining 75% in drawdown untouched , then you can continue to make pension contributions as normal.
As soon as you take any money from the drawdown pot , then you are restricted to a max £4000 pa to put into a pension .

xylophone

As soon as you take any money from the drawdown pot , then you are restricted to a max £4000 pa to put into a pension .

into a Money Purchase (DC) pension

https://adviser.royallondon.com/technical-central/pensions/contributions-and-tax-relief/defined-benefits-and-the-mpaa/

Key facts
From 6 April 2017 the money purchase annual allowance (MPAA) reduced from £10,000 to £4,000. However, this only became law on 16 November 2017 when the Finance Act (No.2) 2017 received Royal Assent.
What are the main triggers for the MPAA:
- taking an UFPLS
- taking FAD income
- taking more than Max GAD income from a capped drawdown plan.
The MPAA does not apply to defined benefit accrual.

From April 2015 anyone taking income from a Flexi-Access Drawdown (FAD) plan or using an Uncrystallised Funds Pension Lump sum (UFPLS) will trigger the money purchase annual allowance (MPAA) of £4,000. On 6 April 2017 the MPAA reduced to £4,000 from £10,000.

But for those who are lucky enough to have a final salary scheme the full £40,000 Annual Allowance (AA) may still apply. Remember individuals with high earnings may be caught by the tapered annual allowance (TAA) and have an AA below £40,000.

The MPAA applies to all Defined Contribution (DC) savings made by that individual after the date it's triggered. If this occurs part-way through a Pension Input Period (PIP) only the contributions made after the trigger are tested against the MPAA. However the total contributions/accrual in that tax year are also tested against the £40,000 AA or TAA.

For the avoidance of doubt, this includes contributions made to any other DC plans the individual has in addition to the one they've taken benefits from.

What about DB?
Accrual under defined benefits (DB) arrangements is not tested against the MPAA, but will be included in the test of total contributions against the AA/TAA:

foxhat2

Thanks that’s what I was unsure of, whether my employer would continue to contribute. :beer:

xylophone

I am rather puzzled.

According to

https://forums.moneysavingexpert.com/discussion/comment/75039308#Comment_75039308

I am full time carer until who knows when but would go back to employment ASAP.

and yet you appear to be saying in your post above that you are currently contributing to a workplace pension.

Do you have a personal pension which you are seeking to put into drawdown and a workplace pension?

foxhat2

I can understand your confusion, it’s my other half’s work pension. Question should have been can he.

Linton

Is the pension you wish to drawdown from tyour current employers pension?Whether one can take the TFLS from an employers pension and continue to be a member of the scheme depends on the scheme rules. You will have to ask HR or whoever deals with pensions.