Pension Recycling and NHS retire and return

Lowtrawler

My wife has recently taken her NHS 1995 pension on retire and return which came with a lump sum. She is continuing in employment with the NHS and contributing to the 2015 scheme.

As the 1995 pension is increasing her income, and consequently, tax band, she would like to pay most of the income from the 1995 pension into a SIPP.

Is this likely to be caught by the recycling rules? Her decision is based entirely on minimising her ongoing tax and not based on the availability of the lump sum.

Linton

The pension recycling rules relate to the tax free lump sum. They do not prevent the use of DB pension income. See https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm133810

mamacita63

Lowtrawler said:

My wife has recently taken her NHS 1995 pension on retire and return which came with a lump sum. She is continuing in employment with the NHS and contributing to the 2015 scheme.

As the 1995 pension is increasing her income, and consequently, tax band, she would like to pay most of the income from the 1995 pension into a SIPP.

Is this likely to be caught by the recycling rules? Her decision is based entirely on minimising her ongoing tax and not based on the availability of the lump sum.

Hi, I am in the same position as your wife and asked the same question here a while back. It seems that the rules are a bit vague but the general consensus was that it comes under normal retirement planning. I have to say I'm still slightly nervous but I am definitely not putting my lump sum into my SIPP, I still have it so I am trusting that the HMRC will see it that way. 

Nebulous2

Lowtrawler said:

My wife has recently taken her NHS 1995 pension on retire and return which came with a lump sum. She is continuing in employment with the NHS and contributing to the 2015 scheme.

As the 1995 pension is increasing her income, and consequently, tax band, she would like to pay most of the income from the 1995 pension into a SIPP.

Is this likely to be caught by the recycling rules? Her decision is based entirely on minimising her ongoing tax and not based on the availability of the lump sum.

Semantics - but - why not pay her wages into the SIPP and live on the pension? 

I retired with a LGPS and then took a part-time job with the NHS. I started a 2015 scheme pension and am paying much of my earnings in excess of those contributions into a SIPP. 

crv1963

Lowtrawler said:

My wife has recently taken her NHS 1995 pension on retire and return which came with a lump sum. She is continuing in employment with the NHS and contributing to the 2015 scheme.

As the 1995 pension is increasing her income, and consequently, tax band, she would like to pay most of the income from the 1995 pension into a SIPP.

Is this likely to be caught by the recycling rules? Her decision is based entirely on minimising her ongoing tax and not based on the availability of the lump sum.

I am in a similar situation, I have bought additional 2015 Pension on an ongoing monthly basis to reduce my earnings as wage+ pension put me firmly in the HR Tax bracket. I also use a SIPP. What she does is use salary for pension contributions and Pension for living expenses. The lumpsum if she has no other use for it could be paid into your Pension as there's nothing preventing her doing this as long as you have the allowances for this. Alternatively she could put it into ISAs. There's also rainy day funds etc to consider, depending on your long term goals, age and expected/ desired income on retirement.

I pay into a SIPP for my wife simply because her pension provision is all DC and not as high expected income when we call it a day as mine.