In reciept of Defined Benefits Pension and Lump Sum, continue Company / Personal contb's into SIPP

segovia

My wife has taken her DB pension and lump sum last year, she is also a director of our Ltd Company which is still trading and has a SIPP which is not in drawdown.

What are the contribution limitations for company and personal contributions in to the SIPP now that she is in receipt of her DB pension?

Thanks

Secret2ndAccount

Taking a DB pension does not trigger the MPAA so your wife's annual allowance is still 40k, with carry forward potentially available.
She can personally contribute up to 80% of her company salary, which is topped up to 100% by the taxman. The company can contribute the rest, up to her annual allowance. There is no tax top-up for the company contribs but the company saves corporation tax because the pension cost reduces profits.
Dividends and pension do not count as earnings - only salary.

segovia

Thanks, we were not sure. I'll need to investigate where she got the information that she could no longer make any pension contributions into her SIPP.

Dazed_and_C0nfused

segovia said:

Thanks, we were not sure. I'll need to investigate where she got the information that she could no longer make any pension contributions into her SIPP.

Does she have another DC pension from which she's taken some taxable money (but not bought an annuity)?

segovia

She did have a DC Pension, but that was transferred to her SIPP.

She took a lump sum and a monthly salary from her DB scheme, we will dig out the letter she received which we believe says she can't make any further tax-free contributions to any other pension scheme 

Secret2ndAccount

Perhaps the letter was reminding you of pension recycling rules which are there to discourage you from taking a lump sum then paying it straight into another pension.

segovia

Secret2ndAccount said:

Perhaps the letter was reminding you of pension recycling rules which are there to discourage you from taking a lump sum then paying it straight into another pension.

I guess that is the subject of my question, how does one differentiate between what was received as a lump sum and what is surplus to requirements cash. I assume that a payment to her SIPP from an employer can't be deemed to be recycled?   

Pat38493

segovia said:

Secret2ndAccount said:

Perhaps the letter was reminding you of pension recycling rules which are there to discourage you from taking a lump sum then paying it straight into another pension.

I guess that is the subject of my question, how does one differentiate between what was received as a lump sum and what is surplus to requirements cash. I assume that a payment to her SIPP from an employer can't be deemed to be recycled?   

Well potentially it could if you make huge increases in the contributions just after taking out a lump sum - there are some guidelines that you can look up about what would attract the attention of HMRC in terms of pension recycling.