DC pension contributions after retirement.

Budgie_TT

Hi. I am at retirement, last day is Friday.

This forum has provided some much needed reassurance with regards to this big change, so, thank you all.

The biggest challenge, for me, is one of mindset, going from saving to spending.  Having said that, I may still have funds surplus and may carry on with the saving mindset for a little while longer.

I am lucky to be in a position where I will have no need to touch my DC pension immediately. A DB pension, state pension and savings (ISA & shares) will suffice for the time being.

In this situation, what are your thoughts on continuing to contribute to the DC pension?

My thinking is along these lines:

£800 deposited in my DC pension provides £1000 in the pot.

If I were to draw this £1000 down in the future, ignoring any investment gains/losses, this would yield £850. Roughly a 6% gain. That is £250 + ( £750 -(£750*0.2)).

What are your thoughts?

QrizB

Yes, it's relatively common to do this.

Dazed_and_C0nfused

And your scope for doing this will be limited once you move into the new tax year and don't have any earnings for pension purposes.

£3,600 gross will then be the maximum for you.

redpete

It's what Mrs RP and I are both doing, putting £2400 (£3600 with HMRC contribution) into each of our SIPPs.

In my case it goes into funding the gilt ladder that's designed to cover the next 3 yrs or so withdrawals from the SIPP. 

Albermarle

This tax year, you could still contribute gross ( including tax relief) as follows.

Your earnings this tax year ( gross, before tax) minus any gross pension contributions made already this tax year( so including tax relief)  

As above when not earning in the next tax year, the max you can add is £3600 gross.

Dazed_and_C0nfused

redpete said:

It's what Mrs RP and I are both doing, putting £2400 (£3600 with HMRC contribution) into each of our SIPPs.

In my case it goes into funding the gilt ladder that's designed to cover the next 3 yrs or so withdrawals from the SIPP. 

That's wishful thinking 😉

£2,880 needs to be paid to get £3,600 gross.

kempiejon

Budgie_TT said:

Hi. I am at retirement, last day is Friday....

I am lucky to be in a position where I will have no need to touch my DC pension immediately. A DB pension, state pension and savings (ISA & shares) will suffice for the time being.

Congratulations.

So presumably you've planned your retirement if so what is the DC pension for?
Once any taxable part of the DC is accessed you're limited to £10k (MPAA) additional in to a pension; with no relevant earnings the £3600 gross mentioned applies.

redpete

Dazed_and_C0nfused said:

redpete said:

It's what Mrs RP and I are both doing, putting £2400 (£3600 with HMRC contribution) into each of our SIPPs.

In my case it goes into funding the gilt ladder that's designed to cover the next 3 yrs or so withdrawals from the SIPP. 

That's wishful thinking 😉

£2,880 needs to be paid to get £3,600 gross.

You are of course correct. I was confused by the £240 a month we are contributing, which is of course £2880 a year.

Dazed_and_C0nfused

redpete said:

Dazed_and_C0nfused said:

redpete said:

It's what Mrs RP and I are both doing, putting £2400 (£3600 with HMRC contribution) into each of our SIPPs.

In my case it goes into funding the gilt ladder that's designed to cover the next 3 yrs or so withdrawals from the SIPP. 

That's wishful thinking 😉

£2,880 needs to be paid to get £3,600 gross.

You are of course correct. I was confused by the £240 a month we are contributing, which is of course £2880 a year.

Still a good deal though 😀

Budgie_TT

That's the benefit of this forum. Putting me in touch with knowledgeable people. Thanks.

The replies raise questions in mind and I could research it (Google), but I'll take the easy option and ask.

The £3600 limit is not something I was aware of, would you care to expand a little. Specifically, under what circumstances this applies.

It seems obvious that the DB income does not count in the same way as earned income.

NoMore

It applies when your relevant uk income is less than £3600, if you have more than that, then that becomes your limit for tax relief.