recycling

ashpan

please move to pensions forum if more appropriate

ive just taken 25% (around £20k) of my SIPP out tax free, can i now move this into my workplace pension (LGPS) as im hoping to retire in a year or so and will it be of any benefit to me to do this or should i invest it in an ISA ?

AlanP_2

I presume you mean pay it into LGPS AVC pot and then take whole lot tax free when starting main LGPS benefits?

Check this out for recyling test:

https://adviser.royallondon.com/technical-central/pensions/contributions-and-tax-relief/recycling-of-tax-free-cash/

If you pass the tests then you can pay it in and benefit from the tax adjustment,

Marcon

If - and it may be quite a big 'if' - this doesn't get classed as recycling, how much are you earning i.e. do you have the necessary 'headroom' to pay in a lump sum of £20,000 in addition to your regular contributions?

Check (with the LGPS administrators, who are the only ones with full details of your pension) if you can take the whole of your AVC pot tax free and if not how much would be tax free.

Apodemus

AlanP wrote: »

I presume you mean pay it into LGPS AVC pot and then take whole lot tax free when starting main LGPS benefits?

Or make a lump-sum APC which might provide the OP with a means of de-risking the DC pot, giving guaranteed inflation-linked income at better rates than an annuity. Depending on the OP’s age, that sum might provide c£2k per annum pension in LGPS. (To pay a nett £20k, you would make a contribution of £25k into pension and claim £5k tax back at year-end).