Can I have a SIPP and a DC pension that my Ltd Company pays into?

KevinTHFC

I am 64 and will be working until I am 66  in March 2026.

From a previous employment I have a DB pension that should be paying around 30K PA  When I am 65.

My Ltd Company contributes to a DC pension, I make no personal contributions. If I take my DB pension when I am 65, I will not have to pay myself as much, and will  build up even more cash in my Ltd Company.

Can I open a SIPP, make payments from my income and get tax relief added to the SIPP?

Dazed_and_C0nfused

KevinTHFC said:

I am 64 and will be working until I am 66  in March 2026.

From a previous employment I have a DB pension that should be paying around 30K PA  When I am 65.

My Ltd Company contributes to a DC pension, I make no personal contributions. If I take my DB pension when I am 65, I will not have to pay myself as much, and will  build up even more cash in my Ltd Company.

Can I open a SIPP, make payments from my income and get tax relief added to the SIPP?

How much will your earnings be once they are reduced?

Ultimately that is likely to be the limiting factor.  For example if you only earn say £5,000 then you will be limited to contributing £5,000 (gross).

Sarahspangles

Are you planning to close or sell your company when you retire? Your exit plan over the next 24 months feels like something that you could usefully discuss with an accountant, if you use one.

dunstonh

Can I open a SIPP, make payments from my income and get tax relief added to the SIPP?

You can but why would you?

Taking less from the company and making employer contributions would be more tax efficient 9 times out of 10.

Marcon

KevinTHFC said:

I am 64 and will be working until I am 66  in March 2026.

From a previous employment I have a DB pension that should be paying around 30K PA  When I am 65.

My Ltd Company contributes to a DC pension, I make no personal contributions. If I take my DB pension when I am 65, I will not have to pay myself as much, and will  build up even more cash in my Ltd Company.

Can I open a SIPP, make payments from my income and get tax relief added to the SIPP?

Find a SIPP which takes employer contributions and you aren't then limited to contributions linked to your earnings.

KevinTHFC

Dazed_and_C0nfused said:

How much will your earnings be once they are reduced? Ultimately that is likely to be the limiting factor.  For example if you only earn say £5,000 then you will be limited to contributing £5,000 (gross).

I would make up my annual 'income' to be about 50K. Are you saying that income from a pension would couldn't count as earnings?

KevinTHFC

Sarahspangles said:

Are you planning to close or sell your company when you retire? Your exit plan over the next 24 months feels like something that you could usefully discuss with an accountant, if you use one.

I will probably go down the Members Voluntary Liquidation route and hopefully will only have to CGT on the cash in the company.

KevinTHFC

Marcon said:

Find a SIPP which takes employer contributions and you aren't then limited to contributions linked to your earnings.

Thanks, didn't know that was a thing.  

Dazed_and_C0nfused

KevinTHFC said:

Dazed_and_C0nfused said:

How much will your earnings be once they are reduced? Ultimately that is likely to be the limiting factor.  For example if you only earn say £5,000 then you will be limited to contributing £5,000 (gross).

I would make up my annual 'income' to be about 50K. Are you saying that income from a pension would couldn't count as earnings?

Yes, for personal contributions (which may not be the optimum choice) you will be limited by your earnings, for most people this will be taxable employment income or self employment profits.

Pension income is not earnings for pension contribution purposes.

KevinTHFC

Dazed_and_C0nfused said:

Pension income is not earnings for pension contribution purposes.

But we still have to pay tax on it  

KevinTHFC

dunstonh said:

You can but why would you?

Taking less from the company and making employer contributions would be more tax efficient 9 times out of 10.

That is a good question! Think I was trying to be too clever.
I have 250K cash in the company currently that I was planning to pay CGT on when I wind up the company. Perhaps I should just increase my employer contributions to the DC pension, to reduce the 'cash mountain'