Paying into pension after early retirement

Albermarle

ossie48 said:

One more question If I could.

I cashed in a DB pension two years back, funds now with Royal London 5.  We're now drawing it down (hence facilitating my wifes early retirement). Having taken a 20% tax free lump sum in 2020 I'll be approaching the point where my monthly draw down will be taxed. Could I do likewise regarding a SIPP that may help mitigate the tax loss although appreciate not fully (or are there any better suggestions).  

If you mean that by transferring a pension from one provider to another, you can somehow change your tax position, the answer is no.
As far as HMRC are concerned, all DC pensions are the same.

Dazed_and_C0nfused

ossie48 said:

One more question If I could.

I cashed in a DB pension two years back, funds now with Royal London 5.  We're now drawing it down (hence facilitating my wifes early retirement). Having taken a 20% tax free lump sum in 2020 I'll be approaching the point where my monthly draw down will be taxed. Could I do likewise regarding a SIPP that may help mitigate the tax loss although appreciate not fully (or are there any better suggestions).  

Perhaps you could clarify this.

Do you mean you took the CETV from a DB scheme and moved it to a DC pot?

Why 20% TFLS, did you only crystallise part of the pot?

What is changing now that means you will start paying tax?

More often than not SIPP's don't save people any income tax.  They just benefit from the pension tax relief.  Were you expecting to pension tax relief and an income tax saving?

xylophone

Do you mean you took the CETV from a DB scheme and moved it to a DC pot?

No - he seems to have had a couple of DB pensions (one already in payment) and he transferred the other to a DC pension with RL.

 https://forums.moneysavingexpert.com/discussion/comment/77737749#Comment_77737749

https://forums.moneysavingexpert.com/discussion/comment/78771071#Comment_78771071

xylophone

(Barclays afterwork) 

This?

https://yourpensionjourney.com/uploads/Pension_Afterwork_Booklet_(My_Rewards).pdf

She has read page 24?

What are her reasons for not leaving it in the scheme?

ossie48

Dazed_and_C0nfused said:

ossie48 said:

One more question If I could.

I cashed in a DB pension two years back, funds now with Royal London 5.  We're now drawing it down (hence facilitating my wifes early retirement). Having taken a 20% tax free lump sum in 2020 I'll be approaching the point where my monthly draw down will be taxed. Could I do likewise regarding a SIPP that may help mitigate the tax loss although appreciate not fully (or are there any better suggestions).  

Perhaps you could clarify this.

Do you mean you took the CETV from a DB scheme and moved it to a DC pot?

Why 20% TFLS, did you only crystallise part of the pot?

What is changing now that means you will start paying tax?

More often than not SIPP's don't save people any income tax.  They just benefit from the pension tax relief.  Were you expecting to pension tax relief and an income tax saving?

I think I'm confusing myself. Yes I cashed in a small DB pension (approx £110k ). My IFA put it into Royal London 5. I initially took £20k (not 20%) as a lump sum out of RL 5 and have started drawing down the rest. I understand I'll pay tax on 75% of this pot once I've taken out the first 25%. 

I'm in receipt of another DB pension (£38k a year but only £24k is taxable ) and I don't work. However reading the posts above it appears I'm asking the impossible. Thanks anyway, I'll certainly explore this for my wife.

ossie48

xylophone said:

(Barclays afterwork) 

This?

https://yourpensionjourney.com/uploads/Pension_Afterwork_Booklet_(My_Rewards).pdf

She has read page 24?

What are her reasons for not leaving it in the scheme?

Because she can't make any more contributions on leaving. Do you recommend she leaves it and opens a SIPP ? 

Bimbly

I don't understand the desire to move the Barclays pension. If there is nothing wrong with it (eg, high charges), you can just leave it where it is.

Open a SIPP (such as Vanguard or Hargreaves Lansdown) for the new money.

Would sound the simplest approach to me.

ossie48

Bimbly said:

I don't understand the desire to move the Barclays pension. If there is nothing wrong with it (eg, high charges), you can just leave it where it is.

Open a SIPP (such as Vanguard or Hargreaves Lansdown) for the new money.

Would sound the simplest approach to me.

No real desire to move, we're just learning as we go along thanks to the forum. I was unaware she could open a SIPP and benefit from the tax relief until pointed out - all good stuff. I think I'm getting there very slowly   

Albermarle

ossie48 said:

Bimbly said:

I don't understand the desire to move the Barclays pension. If there is nothing wrong with it (eg, high charges), you can just leave it where it is.

Open a SIPP (such as Vanguard or Hargreaves Lansdown) for the new money.

Would sound the simplest approach to me.

No real desire to move, we're just learning as we go along thanks to the forum. I was unaware she could open a SIPP and benefit from the tax relief until pointed out - all good stuff. I think I'm getting there very slowly   

She could withdraw from the Barclays pension until it ran out.
The annual contributions to a new SIPP, could just be left alone to accumulate for later use.

Dazed_and_C0nfused

ossie48 said:

Dazed_and_C0nfused said:

ossie48 said:

One more question If I could.

I cashed in a DB pension two years back, funds now with Royal London 5.  We're now drawing it down (hence facilitating my wifes early retirement). Having taken a 20% tax free lump sum in 2020 I'll be approaching the point where my monthly draw down will be taxed. Could I do likewise regarding a SIPP that may help mitigate the tax loss although appreciate not fully (or are there any better suggestions).  

Perhaps you could clarify this.

Do you mean you took the CETV from a DB scheme and moved it to a DC pot?

Why 20% TFLS, did you only crystallise part of the pot?

What is changing now that means you will start paying tax?

More often than not SIPP's don't save people any income tax.  They just benefit from the pension tax relief.  Were you expecting to pension tax relief and an income tax saving?

I think I'm confusing myself. Yes I cashed in a small DB pension (approx £110k ). My IFA put it into Royal London 5. I initially took £20k (not 20%) as a lump sum out of RL 5 and have started drawing down the rest. I understand I'll pay tax on 75% of this pot once I've taken out the first 25%. 

I'm in receipt of another DB pension (£38k a year but only £24k is taxable ) and I don't work. However reading the posts above it appears I'm asking the impossible. Thanks anyway, I'll certainly explore this for my wife.

Do you mean you have only taken tax free lump sums from the Royal London 5 pension?

Taking multiple TFLS payments like that seems an unusual strategy (to me at least!).

Each time you take a TFLS you crystallise part of your pension so the initial £20k TFLS meant you crystallised £80k. 

You took £20k tax free but the if the taxable £60k grows to say £75k then the whole £75k is taxable income when taken out of the pension.