Implications of restarting pension contributions

Ciprico

I hope someone can point me in the right direction.

I'm currently in employment (age 56) and have over the years made significant personal pension and Sipp contributions.

Job is currently a bit "iffy" !

If I stop working in April, and pull (personal tax allowance of) £12,000 from pension, but then restart working again at a later date, and I allowed to contribute back in to pension. (ie new earned money, not recycling pension).

So my question, once you draw a personal pension, have you crossed a line when you can't pay more back into pension again

Spreadsheetman

Look up MPAA.

Mnd

You can take 25% tax free, 1 penny more and you will be restricted to £4k pa

xylophone

The pension you wish to access is a DC (Money Purchase) pension?

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

Flexi-access Drawdown Income
A designation of funds for flexi-access drawdown does not in itself trigger the MPAA, nor does the payment of a PCLS. However, once income (or any lump sums from the designated pot) are taken from the funds designated to a flexi-access drawdown plan, the MPAA will apply (see also Accessing Benefits without Triggering the MPAA below). However, should the income be taken from any dependant, nominee or successor drawdown plans or assets that can be wholly attributable to a Disqualifying Pension Credit then the MPAA will not be triggered.

Marcon

123mat123 wrote: »

I hope someone can point me in the right direction.

I'm currently in employment (age 56) and have over the years made significant personal pension and Sipp contributions.

Job is currently a bit "iffy" !

If I stop working in April, and pull (personal tax allowance of) £12,000 from pension, but then restart working again at a later date, and I allowed to contribute back in to pension. (ie new earned money, not recycling pension).

So my question, once you draw a personal pension, have you crossed a line when you can't pay more back into pension again

If you take £12,000 from your pension and that is less than 25% of its total value (i.e. the 'pot' is worth at least £48,000), all is well. If it represents more than 25% of the pot, you can continue to contribute in future years, but only the first £4,000 per annum will get tax relief.