Sipp in drawdown so can I contribute £2880 or £4000

frugal90

I am drawing down on my SIPP at present, what can I contribute annually Is it £2880 or £4000?
When I get to 60 and start receiving my teachers pension how much will I be able to contribute?

Thanks all

Dazed_and_C0nfused

What pensionable earnings do you have?

frugal90

I am drawing down £27k from April. 25%tax free then the rest in twelve monthly payments. When I get to 60 I will have a db  pension of 22k.

Dazed_and_C0nfused

What pensionable earnings do you have though?

If you don't have any then you can only contribute £2,880 (net).

frugal90

Just got a secure message from HL telling me £4k.

Linton

If you have no employment earnings the limit is £3600 gross of which you contributer £2880 and HMRFC add the missing £720.

MK62

For clarity, income from a pension is not classed as qualifying earnings for calculating pension contributions for tax relief.
So, if the only income you will have in the next tax year is from your teacher's pension (and withdrawing savings from an ISA or saving account doesn't count either - basically it's "earned" income which counts), then all you can contribute to a pension and get tax relief is £2880 (to which HMRC will add £720 in tax relief), as Dazed has said. 

The "£4000" is the restricted Annual Allowance (MPAA) which applies once you take anything from a money purchase (DC) pension, beyond the 25% tax free lump sum. So if your teacher's pension is a DC pension (I thought they were usually Defined Benefit (DB) though), and say in 2 years you get a part time job (for example), you'd then be restricted by the MPAA to contributing a maximum of £4000 gross (£3200 net of tax relief), as you'd have previously taken benefits from a DC scheme.
If your teacher's pension is a DB pension though, this restriction does not apply - so you may need to double check which type of pension you have - the jargon can be confusing.

jamesd

frugal90 said:

I am drawing down on my SIPP at present, what can I contribute annually Is it £2880 or £4000?
When I get to 60 and start receiving my teachers pension how much will I be able to contribute?

If you're still working and getting paid, £4,000. Otherwise £3,600. Pension income doesn't count to increase the amount you can pay in. HL replied about the £4,000 MPAA but that assumes you have enough employment income.

Dox

jamesd said:

frugal90 said:

I am drawing down on my SIPP at present, what can I contribute annually Is it £2880 or £4000?
When I get to 60 and start receiving my teachers pension how much will I be able to contribute?

If you're still working and getting paid, £4,000. Otherwise £3,600. Pension income doesn't count to increase the amount you can pay in. HL replied about the £4,000 MPAA but that assumes you have enough employment income.

...or indeed self-employment income....

xylophone

You have accessed more than the PCLS from a Defined Contribution (Money Purchase) pension.
This means that you have triggered the MPAA in respect of any future contributions to a Defined Contribution Pension.
This means a limit of £3200 (net), £4000 (gross) (provided that your relevant earnings are at least £4000 (gross).
If you have no relevant earnings, or relevant earnings under £3,600 (gross), you are confined to a contribution of up to £2880 (net), £3,600 (gross).
If you were drawing a DB pension but wished to continue to contribute to a DC Scheme, you would not be affected by the MPAA.
If you were still contributing to a DB pension, the MPAA would not apply to contributions to the DB pension.
See https://adviser.royallondon.com/technical-central/pensions/contributions-and-tax-relief/money-purchase-annual-allowance/

frugal90

So when I get my teachers pension aged 60. What can I pay in  to my sipp from my pension income, is it £2880?  Thanks for all the help and advice.