Drawing down still working.

Heisenberg01

I was planning to go at 55, however with just over a year to go I have been re evaluating.my employer pays over a grand into my workplace pension every month, which I would be mad to give up, I also contribute 10%.

So my plan is to take 25% lump sum from my smallest pension, with vanguard at 55, and drawdown to take my salary to 50k for 3 years to allow my globetrotting,( I work a near enough 2 week on, 2week off pattern)
I believe once I drawdown I'm limited to what I can pay into a pension, $2880? 

However, would this affect my employers contribution, would I still get that?

NoMore

By initiating drawdown you trigger the MPAA, which is 10k. This is the max you can contribute to pensions yearly including employer contributions. However is your workplace pension a DB pension ? As 1k a month employer contribution is extremely high (especially as a percentage of your income as you say you aren't currently a high tax earner). Such high contributions are normally associated with DB pensions and as such are treated differently with respect to the AA (and MPAA).

The £2880 (£3600) is a different limit is and the amount of money you can put into pension and still get tax relief, when you do not have enough relevant earnings to cover it. Basically its the amount you can put in if you no longer work.

QrizB

Heisenberg01 said:

So my plan is to take 25% lump sum from my smallest pension, with vanguard at 55, and drawdown to take my salary to 50k for 3 years to allow my globetrotting,( I work a near enough 2 week on, 2week off pattern)

As above, drawing 1p of taxable benefits from a pension will trigger the MPAA and you'll be limited to £10k pa of pension contributions, employer and employee combined.
Could you meet your travel needs with £10k pa of pension "small pots"? These dont trigger the MPAA but youd need to transfer to a provider that supports them.

Marcon

Heisenberg01 said:

I was planning to go at 55, however with just over a year to go I have been re evaluating.my employer pays over a grand into my workplace pension every month, which I would be mad to give up, I also contribute 10%.

So my plan is to take 25% lump sum from my smallest pension, with vanguard at 55, and drawdown to take my salary to 50k for 3 years to allow my globetrotting,( I work a near enough 2 week on, 2week off pattern)
I believe once I drawdown I'm limited to what I can pay into a pension, $2880? 

However, would this affect my employers contribution, would I still get that?

If you 'flexibly access' a defined contribution scheme and take anything more than the 25% tax free element, you are then permanently restricted to £10K a year of tax-relieved contributions if you are contributing to a DC pension. This includes your contribution, any tax relief you receive and your employer's contribution. So if your employer is paying £1K a month into your current pension and it is a DC arrangement, then yes, it would have an impact and you'd effectively lose £2K a year.

Pat38493

You can also avoid triggering the MPAA by only taking the 25% tax free cash from your pensions and not taking any taxable income, if this is an option for you.

Heisenberg01

QrizB said:

Heisenberg01 said:

So my plan is to take 25% lump sum from my smallest pension, with vanguard at 55, and drawdown to take my salary to 50k for 3 years to allow my globetrotting,( I work a near enough 2 week on, 2week off pattern)

As above, drawing 1p of taxable benefits from a pension will trigger the MPAA and you'll be limited to £10k pa of pension contributions, employer and employee combined.
Could you meet your travel needs with £10k pa of pension "small pots"? These dont trigger the MPAA but youd need to transfer to a provider that supports them.

I would be drawing down about 5 k a year.

So small pots is the way to go?

Marcon

Heisenberg01 said:

QrizB said:

Heisenberg01 said:

So my plan is to take 25% lump sum from my smallest pension, with vanguard at 55, and drawdown to take my salary to 50k for 3 years to allow my globetrotting,( I work a near enough 2 week on, 2week off pattern)

As above, drawing 1p of taxable benefits from a pension will trigger the MPAA and you'll be limited to £10k pa of pension contributions, employer and employee combined.
Could you meet your travel needs with £10k pa of pension "small pots"? These dont trigger the MPAA but youd need to transfer to a provider that supports them.

I would be drawing down about 5 k a year.

So small pots is the way to go?

Be aware you can only do it a maximum of 3 times with personal pension arrangements, but as you are only looking at £5K a year, and for 3 years, sounds a very sensible solution. Make sure the pension provider knows you are specifically asking to use the 'small pots' regime - and of course choose a provider that allows this, as QuizB has already cautioned.

Heisenberg01

Which providers are good for this? 

I have a HL account with bare minimum I could utilize if friendly?

wjr4

How much money are you earning to have your employer pay that much into your pension? Could you not just reduce your spending to cover £5k?

Heisenberg01

wjr4 said:

How much money are you earning to have your employer pay that much into your pension? Could you not just reduce your spending to cover £5k?

Bit late, sorry.

The employer contribution is a benefit for stopping the final salary, it supposedly matches the amount had the final salary  continued.

Heisenberg01

Marcon said:

Heisenberg01 said:

QrizB said:

Heisenberg01 said:

So my plan is to take 25% lump sum from my smallest pension, with vanguard at 55, and drawdown to take my salary to 50k for 3 years to allow my globetrotting,( I work a near enough 2 week on, 2week off pattern)

As above, drawing 1p of taxable benefits from a pension will trigger the MPAA and you'll be limited to £10k pa of pension contributions, employer and employee combined.
Could you meet your travel needs with £10k pa of pension "small pots"? These dont trigger the MPAA but youd need to transfer to a provider that supports them.

I would be drawing down about 5 k a year.

So small pots is the way to go?

Be aware you can only do it a maximum of 3 times with personal pension arrangements, but as you are only looking at £5K a year, and for 3 years, sounds a very sensible solution. Make sure the pension provider knows you are specifically asking to use the 'small pots' regime - and of course choose a provider that allows this, as QuizB has already cautioned.

This sounds like exactly what i need.

3 small pension pots, 1 a year for 3 years whilst i milk the workplace pension, due to a change in working hours it would need to be closer to 10k it seems, but still doable .