Pension after drawdown

Eddie2023

Hello, due to a cancer diagnosis and no longer being able to work we had to put my husbands pension pot into drawdown and use money each month. The pot is now empty

Our circumstances have changed and we can  pay money back in (hopefully to benefit from the govt contribution) - though he will never be able to return to work

We were told at the time how much a year this could be but I can't remember

Does anyone know please ?

Dazed_and_C0nfused

Eddie2023 said:

Hello, due to a cancer diagnosis and no longer being able to work we had to put my husbands pension pot into drawdown and use money each month. The pot is now empty

Our circumstances have changed and we can  pay money back in (hopefully to benefit from the govt contribution) - though he will never be able to return to work

We were told at the time how much a year this could be but I can't remember

Does anyone know please ?

If he has no earnings which count for pension contribution purposes then he will be limited to £3,600 per tax year (gross).

He pays £2,880 and the pension company adds £720 in tax relief.

Eddie2023

Hi, thankyou for confirming 

gm0

Full annual allowance (someone who has not taken a DC pension) = 60k
MPAA version (someone who has taken a DC pension = 10k (used to be 4k but was raised recently)
Both these two require "pensionable earnings" to take tax relievable contributions from - so salary from employment - basically not savings interest, dividends etc.  From your description you are caught by MPAA.

Depending upon the situation now and income sources - without pensionable earnings to provide access to the higher limit - it is 2880 paid in net then grossed up to 3600 by the tax relief

With (suitable) income - up to 10k.  Without it - 2880.

Brie

can't help on the practical bits but wishing you strength on the others!!

Eddie2023

gm0 said:

Full annual allowance (someone who has not taken a DC pension) = 60k
MPAA version (someone who has taken a DC pension = 10k (used to be 4k but was raised recently)
Both these two require "pensionable earnings" to take tax relievable contributions from - so salary from employment - basically not savings interest, dividends etc.  From your description you are caught by MPAA.

Depending upon the situation now and income sources - without pensionable earnings to provide access to the higher limit - it is 2880 paid in net then grossed up to 3600 by the tax relief

With (suitable) income - up to 10k.  Without it - 2880.

Hi, thank you. That makes sense

Eddie2023

Brie said:

can't help on the practical bits but wishing you strength on the others!!

Thank you 

Eddie2023

Hello, I've just read that the previous 4 yrs of unused allowance can be used. Is this just for working people or could we pay in 5 x 2880 (to include 2023/2024) and get 5 x 720 added from the govt ? - if done during this financial year

QrizB

Eddie2023 said:

Hello, I've just read that the previous 4 yrs of unused allowance can be used. Is this just for working people or could we pay in 5 x 2880 (to include 2023/2024) and get 5 x 720 added from the govt ? - if done during this financial year

No.

You're confusing two different limits.

The Annual Allowance limits how much you can contribute to a pension in any year. It's currently £60k. Once you have used up all of the current allowance, you can use any spare allowance from previous years.

However, you still need sufficient earnings in the current tax year so, if you were earning £100k, you'd be able to pay £100k in by using the current year's £60k allowance plus £40k of carried over allowance.

But you have not got any earnings, so you're limited to £2880/£3600 and carry-forward of unused annual allowance is irrelevant.

coyrls

Eddie2023 said:

Hello, I've just read that the previous 4 yrs of unused allowance can be used. Is this just for working people or could we pay in 5 x 2880 (to include 2023/2024) and get 5 x 720 added from the govt ? - if done during this financial year

No, you can only contribute up to the larger of your relevant earnings or £3,600 per year.  Carry forward can only be used if you have contributed £60K but your relevant earnings for the current year exceed £60K.

Eddie2023

Ah thankyou, I did think I was being too optimistic !