Paying into pension 1 year before retirement.

Doctor_Who

You might want to read this related thread:

https://forums.moneysavingexpert.com/discussion/comment/80185521/#Comment_80185521

NannaH

You could only put the amount of salary including tax telief into your Sipp, so the £35k wouldn’t be the amount you personally add, iyou would pay in £28k and the tax relief of £7k would bring it up it to £35k. 

Albermarle

Brenster said:

I was curious about this, another hyperthetical question, if you were forunate enough to have say £100k savings, and earned a salary of say £35,000.  Is there anything to stop you putting the £35k into your pension to benefit from the government top up, and also the 25% tax free lump sum you can take on retirement ?  This scenario seems the much more sensible option if you are working, coming close to retirment, and have no immediate requirement to use your savings....
Thanks 

Just be aware that the £35K includes tax relief.
If you were making all the contribution from your savings, you would add £28K and the provider would add basic rate tax relief of £7K.
As you are working you will already be making some regular pension contributions, and these would also reduce how much you could add as a lump sum.

You can take the 25% tax free lump sum when you are 55 ( soon to be 57), or leave it there for a lot later  . It does not matter if you are retired or not. The remaining 75% is potentially taxable, whether it is taxable will depend on your other income at the time.

One tactic is to take taxable income from the pension, in the years between stopping work, and getting the state pension. If you have no other income you can take £12570 of the taxable pension income without paying tax . Therefore getting the full benefit of the tax relief for a few years maybe.

The benefit of doing what you suggest increases even more for a higher rate taxpayer.