Pensionwise advice re SIPP ?

Carolinemjs

In a conversation this morning with a Pensionwise advisor I was told that I can't pay anymore into my SIPP which I've only had for about 3 years, as I've taken money from it. Is this correct?

NedS

What money have you taken from it? Tax free lump sum, drawdown??

Carolinemjs

I've taken it as a lump sum, HL pay it to me less tax and I then reclaim the tax.

xylophone

You have no relevant earnings but are making use of the £2880 maximum net contribution for those in this situation and receiving the tax relief in your HL SIPP?

Have you already made the maximum contribution in this tax year?

Carolinemjs

I have small earnings £1500 pa approx and have made the maximum contribution for this year £2880. I have approx £9800 in the SIPP with HL

cloud_dog

Carolinemjs wrote: »

I have small earnings £1500 pa approx and have made the maximum contribution for this year £2880. I have approx £9800 in the SIPP with HL

Hi

Up to age 75 you can always contribute the minimum (£3600 gross) or up to the maximum of your pensionable earnings, i.e if still working and earning £10k pa at age 74 you could contribute that gross in to a pension.

Can you confirm how you have drawn down from the HL SIPP; did you with draw out the maximum TFLS initially (25% of the account), or are you withdrawing an amount each year which 25% is tax free and the remaining 75% (of the amount withdrawn) is subject to tax (even if you claim that back)?

With regard to adding it in to the HL account that really depends on the crystallisation status of the account (see two questions above) and or how HL may manage these situations, i.e. if the account is crystallised they may provide another account for any additional contributions. If the account is not crystallised then you should still be able to contribute to his account.

SonOf

Pensionwise advice re SIPP ?

Pensionwise do not give advice. They are a generic guidance service. Very very basic. And in this case wrong.

If you have accessed the taxable element of the pension (the 75% chunk) then your annual allowance for paying into a pension is reduced to £4000. As a non-earner, you are further reduced to £3600. So, you can pay £3600 gross a year into the pension up to age 74 inclusive

xylophone

have made the maximum contribution for this year £2880.

The OP has relevant earnings of only £1500 per annum.

Therefore the maximum she can contribute is a net £2880 (gross £3600).

She says (see quote) she has already made this maximum contribution in the current tax year.

This explains Pensionwise comment?

Carolinemjs

cloud_dog wrote: »

Hi

Up to age 75 you can always contribute the minimum (£3600 gross) or up to the maximum of your pensionable earnings, i.e if still working and earning £10k pa at age 74 you could contribute that gross in to a pension.

Can you confirm how you have drawn down from the HL SIPP; did you with draw out the maximum TFLS initially (25% of the account), or are you withdrawing an amount each year which 25% is tax free and the remaining 75% (of the amount withdrawn) is subject to tax (even if you claim that back)?

With regard to adding it in to the HL account that really depends on the crystallisation status of the account (see two questions above) and or how HL may manage these situations, i.e. if the account is crystallised they may provide another account for any additional contributions. If the account is not crystallised then you should still be able to contribute to his account.

I've withdrawn only the max TFLS each time.
Does that mean it is uncrystallised?

Linton

Carolinemjs wrote: »

I've withdrawn only the max TFLS each time.
Does that mean it is uncrystallised?

This is confusing since previously you said:

I've taken it as a lump sum, HL pay it to me less tax and I then reclaim the tax

whhich would imply you have taken more than the TFLS. TFLS's are never taxed in the first place.

It would be helpful if you could clarify.

Crystalised means having drawn out the total TFLS. So you cant simply add to a crystallised SIPP since that would confuse things - the old money would be crystallised and the new money wouldnt. HL may be able to handle this by effectively having different pots within the one SIPP. Otherwise you may have to set up a new SIPP and then when you have withdrawn its TFLS transfer the new crystalised SIPP to the old one.

NedS

Linton wrote: »

Crystalised means having drawn out the total TFLS. So you cant simply add to a crystallised SIPP since that would confuse things - the old money would be crystallised and the new money wouldnt. HL may be able to handle this by effectively having different pots within the one SIPP. Otherwise you may have to set up a new SIPP and then when you have withdrawn its TFLS transfer the new crystalised SIPP to the old one.

Sorry to OP for thread hijacking, but I have a question relating to this. In a few years (at 60) we will want to take the TFLS and drawdown £12.5K per year tax free (personal allowance) pension income to bridge the gap between 60 and SRA (67), whilst sill contributing £3600 gross each year. Does this mean in this situation we would need to open another SIPP into which to make the new ongoing contributions? How many SIPPs is an indivudual allowed to open (I assume then there is no limit)? If we didn't need the TFLS, would it be simpler to do uncrystallised drawdown where the first 25% of each withdraw is tax free?