Drawdown Pension but continuing in paid employment. Advice

Nebulous2

Not meaning to gate crash this - but. 

I'm in receipt of a DB pension. I'm working for the NHS, accruing a care pension. The NHS hours / responsibility have increased so while I was initially thinking about £6k per annum, I could be over £20k. I don't need the money. 

Could I start a SIPP, and add all my spare income to this. Then before it reaches £10k draw it out as trivial commutation? 

Dazed_and_C0nfused

Do you mean you are earning £20k as opposed to the expected £6k?

Nebulous2

Dazed_and_C0nfused said:

Do you mean you are earning £20k as opposed to the expected £6k?

Yes. Recruitment was cumbersome which put me off, and I was working on the nurse bank, expecting to earn around £6k a year. I've been sucked in however, and am working more than I planned. I've also got contracted hours now. I've taken on extra responsibiIity. I really need to have a stern word with myself  to point out I'm supposed to be retired. 

The NI credits are good, as I still need 2 years for a full state pension. The care pension is even better. I've been considering setting up a SIPP as well, even though I don't need the money.  The issue then becomes, what is it for? 

jamesd

Nebulous2 said:

Could I start a SIPP, and add all my spare income to this. Then before it reaches £10k draw it out as trivial commutation? 

No. You could add all of your spare income to it then before it exceeds 10k take it out using the small pots rule.

zagfles

jamesd said:

Nebulous2 said:

Could I start a SIPP, and add all my spare income to this. Then before it reaches £10k draw it out as trivial commutation? 

No. You could add all of your spare income to it then before it exceeds 10k take it out using the small pots rule.

Or you could just leave it in until you retire, why draw it out if you don't need it?

Nebulous2

zagfles said:

jamesd said:

Nebulous2 said:

Could I start a SIPP, and add all my spare income to this. Then before it reaches £10k draw it out as trivial commutation? 

No. You could add all of your spare income to it then before it exceeds 10k take it out using the small pots rule.

Or you could just leave it in until you retire, why draw it out if you don't need it?

I suppose in my head I am retired - I'm down from 5 days a week to 2. I see this as a short-term measure to feed me gently into full-time retirement. 

That was my question here though:- Nebulous2 said:

Dazed_and_C0nfused said:

Do you mean you are earning £20k as opposed to the expected £6k?

I've been considering setting up a SIPP as well, even though I don't need the money.  The issue then becomes, what is it for? 

Am I letting the tax relief tail wag the dog?

One of our issues is that almost all of our post retirement income is in my name and subject to tax, while my wife has an unused personal allowance but is limited to the £2880 / £3600 limit for contributions.  I suppose I could leave it in the SIPP to be passed on after my death. At which point it wouldn't be subject to tax for withdrawing it. 

Dazed_and_C0nfused

Does your wife not have any pensionable earnings or are going off the completely incorrect information on gov.uk?

https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief

If you do not pay Income Tax
You still automatically get tax relief at 20% on the first £2,880 you pay into a pension each tax year (6 April to 5 April) if both of the following apply to you:
you do not pay Income Tax, for example because you’re on a low income
your pension provider claims tax relief for you at a rate of 20% (relief at source)

zagfles

Nebulous2 said:

zagfles said:

jamesd said:

Nebulous2 said:

Could I start a SIPP, and add all my spare income to this. Then before it reaches £10k draw it out as trivial commutation? 

No. You could add all of your spare income to it then before it exceeds 10k take it out using the small pots rule.

Or you could just leave it in until you retire, why draw it out if you don't need it?

I suppose in my head I am retired - I'm down from 5 days a week to 2. I see this as a short-term measure to feed me gently into full-time retirement. 

That was my question here though:- Nebulous2 said:

Dazed_and_C0nfused said:

Do you mean you are earning £20k as opposed to the expected £6k?

I've been considering setting up a SIPP as well, even though I don't need the money.  The issue then becomes, what is it for? 

Am I letting the tax relief tail wag the dog?

One of our issues is that almost all of our post retirement income is in my name and subject to tax, while my wife has an unused personal allowance but is limited to the £2880 / £3600 limit for contributions.  I suppose I could leave it in the SIPP to be passed on after my death. At which point it wouldn't be subject to tax for withdrawing it. 

You still get full tax relief on 25% of what you put into the pension, because of the tax free lump sum, even if the rest is taxable (tax deferred) when you withdraw. Plus there's no tax on growth/dividends/interest while in the pension.

But it is subject to tax on your beneficiaries after your death unless you die under 75.

Nebulous2

Dazed_and_C0nfused said:

Does your wife not have any pensionable earnings or are going off the completely incorrect information on gov.uk?

https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief

If you do not pay Income Tax
You still automatically get tax relief at 20% on the first £2,880 you pay into a pension each tax year (6 April to 5 April) if both of the following apply to you:
you do not pay Income Tax, for example because you’re on a low income
your pension provider claims tax relief for you at a rate of 20% (relief at source)

No - my wife has some health problems and hasn't been in paid employment for a long time. She has a small NHS pension due, but it will use very little of her personal allowance. Probably around £2k a year.