Can I pay I into a pension even though I’m retired and both my DB and State Pensions are in payment?

MikeFloutier

Can I pay I into a pension even though I’m retired and both my DB and State Pensions are in payment?

I’m 68, male, married, not working.

I’m just doing the annual £2,880 thing for my wife and suddenly wondered if it applied to me too.

Probably a really silly question, but...

Dazed_and_C0nfused

No reason why not.

You will be limited to £2,880 by being a non earner. 

Could your wife contribute more or she is a non earner too?

Brie

Doesn't pension income count as income?  One does get taxed on it afterall.

Dazed_and_C0nfused

Brie said:

Doesn't pension income count as income?  One does get taxed on it afterall.

Not for pension contribution purposes.

You only take into account pensionable earnings.  Referred to here as relevant earnings

https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/tax-relief-members-contributions/

xylophone

Probably a really silly question, but...

 "Seek and you will find..."

https://www.hl.co.uk/help/sipp,-drawdown-and-annuity/sipp/contributions/can-i-invest-in-a-pension-if-i-dont-have-earnings

Yes, every UK resident under 75 can make pension contributions, even those with no earnings.

Their contributions will receive 20% automatic tax relief even if they pay no tax.

They can contribute up to £3,600 each year - a payment of £2,880 to which the government automatically adds £720.

This is a very tax-efficient way to invest for a non-earning spouse, child or anyone who's already retired.

https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm044100

MikeFloutier

Dazed_and_C0nfused said:

No reason why not.

You will be limited to £2,880 by being a non earner. 

Could your wife contribute more or she is a non earner too?

Thanks D&C, she may well do in the future as she's just published her first book, I'll remember!

xylophone said:

Probably a really silly question, but...

 "Seek and you will find..."

https://www.hl.co.uk/help/sipp,-drawdown-and-annuity/sipp/contributions/can-i-invest-in-a-pension-if-i-dont-have-earnings

Yes, every UK resident under 75 can make pension contributions, even those with no earnings.

Their contributions will receive 20% automatic tax relief even if they pay no tax.

They can contribute up to £3,600 each year - a payment of £2,880 to which the government automatically adds £720.

This is a very tax-efficient way to invest for a non-earning spouse, child or anyone who's already retired.

https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm044100

Many thanks xylophone, good to see you're still the king of the links. "Ask and you will receive"

MikeFloutier

Ok, I just realised, I don’t think I can benefit from this in the same way as my wife.

Presumably, although my entire income is pension income, and therefore not eligible for calculating relievable pension contributions, it WILL mean that I have to pay tax on 75% of the entire £3,600 that I would withdraw each year.

Hence the government would chip in £720 but I’d have to pay (at 20%) £540 in tax.

Does that make sense?

Dazed_and_C0nfused

Yes it makes sense but it's still a 6.25% return for not too much effort.

xylophone

Yes it makes sense but it's still a 6.25% return for not too much effort.

So rejoice and be glad in it!

MikeFloutier

Amen to that, thank you both, I’ll go ahead, plus it’s only tied up for a few weeks.

Thrugelmir

Dazed_and_C0nfused said:

Yes it makes sense but it's still a 6.25% return for not too much effort.

Only if there's no charges levied on processing the withdrawl.