Thinking of doing this, would appreciate your criticism please

For the last few years my pension saving has been influenced by the LTA as I was probably going to just breach it. That now appears to have gone away.  Thanks Jez.

I am coming up with a new plan and would appreciate feedback as there will be all sorts of things that I've missed at this early stage.  I am 55 next month so have access to my pensions although I don't plan to start drawing them for another 4 years (roughly).

I earn £150k in round numbers and current pension contributions are limited to about £15k/y into my employer's DC scheme.  With the removal of the LTA I am thinking about taking £30k/yr from my ISA and putting it into my SIPP.  This would have the advantage of taking me out of the 45 and 60% tax bands entirely.  My income in retirement is likely to be in the 40% tax band.

If I put 30k/y into my SIPP how much is counted against my AA?  I presume that it would be 37.5k (with the 20% from Jez)?  I would then see an additional sum come back to me through my tax return but this wouldn't count towards the AA as it doesn't go into the SIPP.  Or is the full amount of tax rebate counted, even though only the 20% element goes into the SIPP?  Now that I've typed this it seems more likely that it is the whole grossed up amount.  God knows how I work that out accurately with 2 different tax rates plus a sliding PA withdrawal and a variable salary (bonus, car etc)!

In addition I plan to take £7.5k in tax free lump sum each year(+1 day) and recycle this (within the rules).

Clearly I will make sure that I stay within the AA although as I have only made less than 15k contributions in each of the last 3 tax years I think that I can carry the balance over so have some leeway.

Thanks for you thoughts on my ramblings.


  • LintonLinton Forumite
    16K Posts
    Part of the Furniture 10,000 Posts Name Dropper Hung up my suit!
    Your first understanding of how personal contributions into a SIPP work is correct.  It is only what you pay in with the 20% basic rate rebate added that is "contributed" and counts against the AA.  The remaining 20% higher rate tax part is completely outside the SIPP and nothing to do with the AA as it is paid to you.

    The one thing I dont know is how this interacts with the £150K tax band.
  • megacattmegacatt Forumite
    8 Posts
    Eighth Anniversary First Post Combo Breaker
    Thanks, Linton, makes the maths easier.
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