Forces pension recycling rules

606 Posts

Hi, maybe a bit niche but I know some ex-forces on here:
I've been reading a bit on pension income being used to contribute into pension pots. It seems a common discussion on the forum but I've noticed posters mention recycling rules to be wary of which from my understanding is about using tax free pension to put into a pension pot. My situation as follows:
In a couple of years I will be in receipt of a forces immediate pension at age 40. I expect to be in full employment whilst collecting this and be a base rate taxpayer. I suspect the pension would have the relevant tax code so that I receive an equal post-tax monthly amount. I will also be contributing to whatever type of pension scheme my employer would have.
I was considering to pretty much put my full monthly pension into a DC pot every month- would I fall foul of recycling rules? If I would, it's no great shame, I would just have to spend it on beer instead of wasting it on pension contributions.
I've been reading a bit on pension income being used to contribute into pension pots. It seems a common discussion on the forum but I've noticed posters mention recycling rules to be wary of which from my understanding is about using tax free pension to put into a pension pot. My situation as follows:
In a couple of years I will be in receipt of a forces immediate pension at age 40. I expect to be in full employment whilst collecting this and be a base rate taxpayer. I suspect the pension would have the relevant tax code so that I receive an equal post-tax monthly amount. I will also be contributing to whatever type of pension scheme my employer would have.
I was considering to pretty much put my full monthly pension into a DC pot every month- would I fall foul of recycling rules? If I would, it's no great shame, I would just have to spend it on beer instead of wasting it on pension contributions.
0
Latest MSE News and Guides
Replies
might happen to get from your forces pension.
Let's face it, recycling is a rule more honoured in the breach than the observance. If you choose to put more of your earned income into pension and use the forces payment to bridge the gap for your living expenses, how on earth would HMRC ever be able to argue that it was recycling...?
Assuming of course you don't go and open a separate bank account to receive just your forces pension into, give it a nickname of 'pension recycling account' and then directly pay that money into a SIPP, then you'll be fine
PTM133810 - Unauthorised payments: Deemed or specific situations that are unauthorised payments: recycling of pension commencement lump sums: overview - HMRC internal manual - GOV.UK (www.gov.uk)