Looking to Protect My 25% Tax-Free Lump Sum

Albermarle

JoeCrystal said:

Albermarle said:

I understood that some people were able to put it back, under the general rules about 30 day cooling off periods with their providers, but not 100% sure to be honest.

Here is the newsletter I remembered reading: https://www.gov.uk/government/publications/pensions-schemes-newsletter-165-december-2024 but here is the snip of it:

Tax treatment of tax-free lump sums paid back into a registered pension scheme

We are aware that some schemes are being asked by members how they can return payments of pension commencement lump sums (PCLS) or uncrystallised funds pension lump sums (UFPLS) that they took because of speculation about changes that might occur affecting their pensions in the 2024 Autumn Budget.

Some pension contracts and policies allow for a cooling-off period. Under Financial Conduct Authority (FCA) rules, cooling off rights apply to the purchase of a new product only, for example the purchase of an annuity. The payment of a PCLS or UFPLS is not a new product, which means that cooling off periods do not apply to those payments.

If the conditions for making a payment of a PCLS or UFPLS are not met, for example if a member is not entitled to a relevant pension such as a pension, a lifetime annuity or putting funds into drawdown, within 6 months of the PCLS being paid, it is an unauthorised payment and the unauthorised payments charges will apply. Read the Pensions Tax Manual: PTM063210 and Pensions Tax Manual: PTM063300 for further details.

The payment of a tax-free lump sum cannot be undone and the member’s lump sum allowance will not be restored. The lump sum must be tested against their lump sum allowance at the time the lump sum was paid from their pension scheme.

Unauthorised payments charges may apply if contributions to pension schemes are made out of tax-free lump sums and the conditions for the recycling rule are met.

Sounds pretty clear, thanks for that.

Ciprico

I was in similar position/age, and had about 25% of sipp in gilts as I wanted to derisk before retirement...(Avoiding Sequencial risk etc).

It wasn't a big decision to take the 25% in gilts out of sipp and put in low coupon gilts in iweb general acct. 

Was also helped in making that decision as I was approaching the old LTA limited, so any subsequent growth in sipp wouldn't be particularly tax efficient....

So I did as you are contemplating for practical reasons, not for the rumours..... but the end result os the same....

Sugar62

Thank you SVaz and Ciprico, gilts looks like a feasible option and definitely worth exploring further too.