Can I pay back in if i take a lump sum?

Aarchiee

I'm 55 this year and I was thinking about taking a lump sum from my pension about 10k, clearing all credit cards and loans etc. So for the remainder of my working life I will debt free (even increase my pension contributions). Can I, over the next couple of years pay back the 10k in several lump sums to put the pot back into the position it was before taking the lump sum ? 

[Deleted User]

That will probably fall into recycling - so no as you would have two bites of the tax cherry. You could put it into a ISA instead and maybe use some of the ISA dividends to put into the Pension (can somebody verify that for me)

xylophone

https://adviser.royallondon.com/technical-central/pensions/contributions-and-tax-relief/money-purchase-annual-allowance/

You might need to consider  MPAA if you wish to continue to contribute more than £4000  (gross) a year to your pension.

Taking the  tax free 25%  PCLS does not trigger the MPAA.

Ceme3000

HL offer a fact sheet on what is and isn't recycling.  Might be worth a read.
https://www.hl.co.uk/help/sipp,-drawdown-and-annuity/sipp/retiring/what-is-pension-recycling

Brynsam

Deleted_User said:

That will probably fall into recycling - so no as you would have two bites of the tax cherry. You could put it into a ISA instead and maybe use some of the ISA dividends to put into the Pension (can somebody verify that for me)

Dividend income can't be treated as 'earnings' for pension contributions, but if OP has earned income which covers the contributions they intend to make, it's a bit of an academic question anyway.

OP, if you stick to taking £7,500 you're fine. See https://www.pensionsadvisoryservice.org.uk/about-pensions/saving-into-a-pension/pensions-and-tax/pension-lump-sum-recycling

Albermarle

How much is the pot overall ?

Aarchiee

Albermarle said:

How much is the pot overall ?

It's sitting at around 100k at the moment and the reason I'm wondering about paying the money back in again is that my father has decided he doesn't need any of his savings (just over £30,000) anymore and wants to give them to me @ £3000pa that's the limit of what he can give me out of his account. So I was going to use that and pay it @ 3000pa back into the pot.

mark55man

doesn't strike me as recycling as you have any number of sources you cold argue wer funding the contributions.

However it is a little bit of a deal (administratively, technically, even emotionally) to start taking your pension so if you are happy to wait a little why not use your father's pot to clear the debts - I guess this would depend on how much interest they were charging.  But I'm not sure I would be un-investing my funds now, when I could leave it in the market for a while longer.

I did take a chunk of my tax free lump sum about your age, but that was for 3 reasons, one my company gave a good incentive for paying an annual bonus into the fund, and although I wanted the incentive I also wanted the money which I used to top up my OH pension.  OH had 11K or so income, and by paying into her pension with my lump sum she got additional relief - which was a nice bonus.  

I  do have some CC debt - mainly from helping the kids up with various major purchases to take advantage of my better credit score. I think you should take that debt on the chin as a lifestyle choice and not use the pension to fund its clearance.  However much you may be wanting to be debt free.  I reconciled it internally by saying I was debt neutral - I could pay it off with one press of a button but I choose not to.  That was good enough for me