Standard Life Lump Sum into Pension

Bolt1234

I am 63 and have two pensions from when I was working for BT. The first one I have already taken 25% lump sum and the pension has been paying out for over 4 years.  This was the biggest one.

The second one is with Standard Life worth £25k. My retirement date with this one is Nov 2025. 

Due to inheritance I now have between £30-£50k spare.  Children grown up and moved out.  

Mortgage paid off and a very healthy Emergency Fund.  I also have various savings.  £140k of these savings are in a fixed  rate 1 year scheme which finishes in Sept.  Interest is 6.5%. Of course  tax is payable on this too..

I am using a financial advisor but thought this might be a simple one that you wonderful people could answer.

Should I just put a lump sum like £30k straight into Standard Life where I will of course get some tax relief.  I am still working and my other BT pension and salary equates to just over £50k per year.  

Nov 25 is hurtling towards me and it is also very likely I will have some more inheritance due in the next 6 months. I am in very good health and come from a long line of long livers but of course you never know.

Wills are in place for both of us.   

Any advice or should I go back to my FA for this one?

Phoenix72

Was it a DC or DB scheme that you have accessed?

Bolt1234

My first pension was a Defined Benefit.  Then BT moved us to Standard Life.

Notepad_Phil

Bolt1234 said:

Should I just put a lump sum like £30k straight into Standard Life where I will of course get some tax relief.  I am still working and my other BT pension and salary equates to just over £50k per year.  

The amount you can put in will depend solely on your salary as your BT pension will not be counted as relevant earnings, so that might reduce the amount you can add.

Instead of adding the money into your Standard Life, you could perhaps increase the amount you are putting into your current workplace pension and live off the £30k - I assume you are signed up to your workplace pension and if the scheme uses Salary Sacrifice then you'd save on National Insurance as well.

Bolt1234 said:

Any advice or should I go back to my FA for this one?

Is this really just a FA or are they an Independent Financial Advisor (IFA)? If the former then maybe think of getting someone who could look out at the whole market rather than at just what their company offers.

Bolt1234

Sorry.  I am a sole trader so no pension.  This money is 100% spare.  I won’t need it for the future regardless. My actual salary depends on the hours I do but for the last 3 years it’s been between £23-£25k.  It’s a part time role with a big project coming up in the next 3 months.  Very small company btw.

It looks like I cannot put more than 100% of my salary so £25k.  Thinking it might be worth speaking to my IFA. 

Dazed_and_C0nfused

I am still working and my other BT pension and salary equates to just over £50k per year.  

I am a sole trader so no pension. 

Very small company btw.

You seem to be very confused!

A sole trader doesn't have a salary. 

A sole trader isn't a company.

What is the correct position?

Marcon

Bolt1234 said:

Sorry.  I am a sole trader so no pension.  This money is 100% spare.  I won’t need it for the future regardless. My actual salary depends on the hours I do but for the last 3 years it’s been between £23-£25k.  It’s a part time role with a big project coming up in the next 3 months.  Very small company btw.

It looks like I cannot put more than 100% of my salary so £25k.  Thinking it might be worth speaking to my IFA. 

Good idea. Given your level of confusion (you are far from alone!), that should maximise the chances of doing what's best for you.

ader42

Also if your salary is £25k then the maximum into the pension would be 80% of that, so £20k from you and then Tax Relief will be added to make it upto £25k. 

I assume the 25% lump sum you took was 4 years ago? ergo no issue with the recycling rules I would imagine.