SIPP withdrawal

Lewiboy

Can you please talk me through how I withdraw the £3600 from my SIPP. I have been contributing £240 per month over a number of years and need to withdraw some from my SIPP with Hargreaves’s Lands down.

Thanks, Lewiboy

jimjames

Presumably you are over 55? What's the reference to "the £3600", if you've paid in £240 over a number of years you'll have paid in more than that amount. But if you contact HL you should be able to draw money out. It will mean you are limited to the amount you can pay into a pension in future so it will also depend on whether you are working or not.

ColdIron

There are many things to consider before doing this but in essence you have 2 options

UFPLS (Uncrystallised Funds Pension Lump Sum) Adhoc lump sums
https://www.hl.co.uk/retirement/ufpls

Drawdown. You crystallise some or all of your SIPP into a Drawdown SIPP and take regular payments
https://www.hl.co.uk/retirement/drawdown

This is worth reading

https://www.hl.co.uk/free-guides/taking-money-from-your-pension

Familiarise yourself with the tax treatment of withdrawals and the effects of the MPAA (Money Purchase Annual Allowance) as this may affect the amount of contributions going forward

ColdIron

jimjames said:

What's the reference to "the £3600", if you've paid in £240 over a number of years you'll have paid in more than that amount.

Yes, this strikes a discordant note and makes me think the OP has something more specific in mind

Some details would help

Lewiboy

HL are asking for the method of withdrawal. I’m assuming it’s UFPLS ?

jimjames

Lewiboy said:

HL are asking for the method of withdrawal. I’m assuming it’s UFPLS ?

Check the link posted above by ColdIron to help you decide

ColdIron

Lewiboy said:

HL are asking for the method of withdrawal. I’m assuming it’s UFPLS ?

Only you can decide what is right for you and your circumstances (which we don't know). UFPLS is one option but it will trigger the MPAA. Drawdown is another, it is possible to take money using this route without paying tax or triggering the MPAA

Perhaps you could expand on what you are trying to achieve and maybe any other income: earnings, state pension, other pensions, tax status etc

where_are_we

Lewiboy must earn less than £3600 per annum, hence the £240 per month SIPP contributions which equates to £2880 net contributions per annum and HMRC will then add annual tax relief of £720. £3600 gross per annum, is the maximum SIPP contribution that will qualify for tax relief. Since 2015 it has been possible to do this and it equates to a 6.2% gain each year if you withdraw  £3600 the following year if you are a 20% tax payer. If you are non tax payer and have £3600 headroom below the personal pax allowance of £12570 you will get a return of 25% on your £2880 annual contribution. Search on the MSE pensions forum for full information. Personally I used a UFPLS each year and you can start this process online, and then they will post the form for you to fill in. Alternatively you can start by phone but be prepared for a long conversation. Be warned that you may over pay tax on your withdrawal and you will have to claim it back from HMRC. As others have said you can withdraw more than £3600 but make sure to keep £50 in your SIPP to keep it running (it was £50 a few years ago) and continue with your £240 a month contributions.

xylophone

OP, did you retire early three years ago with your DB pension?

You are now aged around age 58 with no earned income?

How much is the SIPP worth now?

And incidentally, what exactly is now shown on your state pension forecast (estimate to 5/6/23)?