25% tax free option

Livefortheday

Hello, this is my first post & looking for advice please .

I am 57 & would like to know if the following is an option, ( not sure after talking to Aviva & pension wise.
Can I take 25% cash tax free from my SIPP but continue to pay in and receive usual tax benefits ? At least until I retire in 4-5 years time.

Looking to fund an extension on house. Don’t want to borrow & have a frozen final salary pension that means i can afford to reduce my SIPP expected final return, thank you for any suggestions 

Marcon

Livefortheday said:

Hello, this is my first post & looking for advice please .

I am 57 & would like to know if the following is an option, ( not sure after talking to Aviva & pension wise.
Can I take 25% cash tax free from my SIPP but continue to pay in and receive usual tax benefits ? At least until I retire in 4-5 years time.

Looking to fund an extension on house. Don’t want to borrow & have a frozen final salary pension that means i can afford to reduce my SIPP expected final return, thank you for any suggestions 

If you are currently aged at least 55 (which you are) and haven't drawn any benefits from your SIPP, then you can take 25% tax free and continue to contribute without triggering the money purchase annual allowance (which would limit you to maximum tax-relievable gross annual contributions of £10K).

Hard to understand why Aviva and Pensionwise left you 'unsure', which makes me wonder if there's more to it than your question suggests? Maybe opening a second SIPP if there are contractual reasons why you can't go on paying into this one after taking the 25% tax free cash?

Notepad_Phil

I believe some older Aviva pensions will not allow further contributions to be paid in once you have put it fully into drawdown i.e. have taken out the full 25%, and that is even if you are not drawing any income out.

So if you do have a pension started many years ago then this might impact you, but if you really do have something with SIPP in its title then I would have thought it a more recent one that fully supported such things.

But even if you have one of these pensions, there's nothing to stop you from contributing to a completely new SIPP or to transfer your existing SIPP to another provider who will allow you to take 25% and then to continue contributing.