Savings or pension

grumiofoundation

redsi2 said:

Good Morning Forumites, I wonder if there is anyone out there who can help me?

I am a 50 year old firefighter. I withdrew from the firefighters pension scheme in 2015 as I could not afford the contributions from my salary (4 kids are expensive!), and I would have had to work until I was 77 to get a full defined benefits pension.

I have a SIPP with 100k+ in it, and I can now afford to pay in a bit more. Rather than just topping up my payments and getting my tax relief, does anyone know if the 'opt in' thing means I can get my employer to add to my pension as it is, rather than rejoining their own expensive scheme? I know it sounds like I want to have my cake and eat it, but at 50 I can't see me running up ladders for much longer, so I am trying to get as much in my pot as possible before my knees give out!

Any help would be most appreciated.

Would recommend starting your own thread to get more replies/help (probably pensions board is more suitable). 

https://forums.moneysavingexpert.com/categories/pensions-annuities-retirement-planning

Albermarle

Bobinyorkshire said:

Thank you again for all your helpful comments.

I am a bit confused about the private pension though. 

Whilst I understand the option to pay in and get tax relief with the opportunity to get 25% of the total tax free at 55, I thought the remainder had to be by way of annual payment with no access to the total sum.

Can you withdraw as much pension as you like, under the personal allowance threshold, if you are not earning?

I think I might have misunderstood - otherwise it would make sense for me to pay into a pension and get my government enhancement with a view to withdrawing it while I am not taking my NHS pension ie not earning.

Also, if the tax relief is only against a salary can you use it against previous years salaries?

Not sure if it got lost in all the other comments but your priority should be to top up your State pension NI years before you do anything else.

Bobinyorkshire

Thank you for all these really helpful comments. I have looked at my NI and my wife’s. She needs to buy 4 years and I need 3 more years to achieve the maximum possible as we were opted out of SERP as NHS staff. Buying theses extra years for my wife, when these becomes available, will be recovered in only 3-4 years when she is only 71. I will definitely do this and am really grateful you pointed this out

Bobinyorkshire

I have set up a SIPP and intend to pay in the maximum amount up until April 2022 (current salary minus NHS pension contributions minus tax uplift)  - about 20k which will be increased to 25k after tax increase.

Can I ask? If I finish work on 31st March 2022, can I use 12.5K (below tax PA) alongside savings to live on for April 2022 to April 23 and a further 12.5K for April 23 to April 24? Or am I allowed to remove more money from the SIPP in the 1st year due to the rule of 25% tax free? If so, can I add more to the SIPP in this year (when not earning) to bolster the amount I can remove in year 2. This would help to limit the amount of savings used.

My intention is then to start my NHS DB pension once the SIPP is emptied.

Hope this makes sense. 

As always, your helpful advice is always appreciated.

Albermarle

Bobinyorkshire said:

I have set up a SIPP and intend to pay in the maximum amount up until April 2022 (current salary minus NHS pension contributions minus tax uplift)  - about 20k which will be increased to 25k after tax increase.

Can I ask? If I finish work on 31st March 2022, can I use 12.5K (below tax PA) alongside savings to live on for April 2022 to April 23 and a further 12.5K for April 23 to April 24? Or am I allowed to remove more money from the SIPP in the 1st year due to the rule of 25% tax free? If so, can I add more to the SIPP in this year (when not earning) to bolster the amount I can remove in year 2. This would help to limit the amount of savings used.

My intention is then to start my NHS DB pension once the SIPP is emptied.

Hope this makes sense. 

As always, your helpful advice is always appreciated.

Many posters on here take out £16,760 per tax year from their pension , all tax free.

£4190 tax free ( as part of the 25% tax free ) and £12570 taxable but not taxed if no other income .
This could be as a lump sum , or as 12 regular monthly payments with some providers.
If you take a lump sum you will get taxed due to the way HMRC operate but you can easily claim it back. 

 If so, can I add more to the SIPP in this year (when not earning)
If you have no earned income the maximum you can add to a pension is £2880 - tax relief of £720 will be added to this .

Bobinyorkshire

Thank you for you advice 

Bobinyorkshire

Sorry I hope you don’t mind if I clarify this point. I could withdraw £16760 from my SIPP tax free each year (and not just the 1st year only) if have no other income. Furthermore I could add £2880 to that SIPP in subsequent years?

Albermarle

Bobinyorkshire said:

Sorry I hope you don’t mind if I clarify this point. I could withdraw £16760 from my SIPP tax free each year (and not just the 1st year only) if have no other income. Furthermore I could add £2880 to that SIPP in subsequent years?

That is correct. 

sevenhills

redsi2 said:

I am a 50 year old firefighter. I withdrew from the firefighters pension scheme in 2015 as I could not afford the contributions from my salary (4 kids are expensive!), and I would have had to work until I was 77 to get a full defined benefits pension.

I have a SIPP with 100k+ in it, and I can now afford to pay in a bit more.

I am sure someone with detailed knowledge will be able to be more specific, but you will be wiser to contribute to your employers scheme, as your employers will contribute at least 15% towards it and not contribute to your SIPP.

You should post your own thread in the pension board.

https://forums.moneysavingexpert.com/categories/pensions-annuities-retirement-planning

https://www.wypf.org.uk/firefighters/

Bobinyorkshire

Thank you, that’s really useful to know