Tiny pension pot coming up for 75

Victorwelldue

My father has been retired and living off state pension for a few years. He has no other income and he's 75 in a couple of weeks. He has around £2K in a workplace DC pension from his last job that's never been touched. He also has around £35K in savings. Is it right that he can pay in £2880 into his pension before he hits 75 and thereby gain £720 in tax relief? Have I understood that correctly? If so will just a couple of weeks be long enough for it to all go through?

Dazed_and_C0nfused

Yes he can.  If you can get it done online it might just be a few minutes work.

Victorwelldue

Great thanks. He doesn't do online banking etc, would there be any issues if I paid in the money from my own bank account? Also I assume due to the low amount, he will be able to just withdraw it out all at once (if he wants to)? Although I guess if doing so it would be better to take out half this tax year then half next year to avoid paying income tax on around £1500 or so he'd be over his annual allowance? (think his SP is around £8.5K)

Dazed_and_C0nfused

Not all providers pre-fund the tax relief so it could several weeks before the whole £3,600 is available.

He can take 25% as a TFLS so only £2,700 is taxable.

Best to be certain about his other income as even small differences could make a big difference to the tax payable.  For example is the State Pension figure based on a monthly amount?  If so it could be understated as State Pension is paid 4 weekly (or weekly), not monthly.

Also, some providers will impose charges if you take the whole lot very quickly so best do a bit of research on the best one for the specific thing you plan on doing.

Albermarle

He doesn't do online banking etc, would there be any issues if I paid in the money from my own bank account

It is possible to do this, but probably you will need to contact the provider, rather than just doing it online.

When the £2880 + £720 is added, he will actually have £5600 or thereabouts in his pension. He could take all of this out if he wanted, or none of it , or a part of it. If he takes all of it, the provider may well close the account.

If it is an older pension, then there may be little flexibility in how the money can be taken. Suggest you look into the details before doing anything. It might be easier just to take the £2K and start again with a modern pension.

Victorwelldue

Dazed_and_C0nfused said:

Best to be certain about his other income as even small differences could make a big difference to the tax payable.  For example is the State Pension figure based on a monthly amount?  If so it could be understated as State Pension is paid 4 weekly (or weekly), not monthly.

Spot on with this, thanks for pointing that out.

Victorwelldue

Albermarle said:

He doesn't do online banking etc, would there be any issues if I paid in the money from my own bank account

It is possible to do this, but probably you will need to contact the provider, rather than just doing it online.

When the £2880 + £720 is added, he will actually have £5600 or thereabouts in his pension. He could take all of this out if he wanted, or none of it , or a part of it. If he takes all of it, the provider may well close the account.

If it is an older pension, then there may be little flexibility in how the money can be taken. Suggest you look into the details before doing anything. It might be easier just to take the £2K and start again with a modern pension.

Yes will contact provider. Its actually a fairly modern pension but will check options regardless.