Adding funds to a pension after taking tax free cash

Good_Money

About a year ago I took some of the 25% tax free cash from one of my pensions.

I took 10% - The pot was £60k and I drew £6k which I used to pay off a loan and credit cards.

The pension pot has almost now returned to the same level. currently £59,250.

Can I now pay in some savings? I have managed to save up £3,000.

I have no need to access the rest of the pension pot for now.

I am 56.

Isthisforreal99

Do you have any earnings from employment or self -employment?

El_Torro

If the £6k you took was all tax free cash then you are not affected by MPAA. If some of it was taxable then you can still pay in up to £10k gross, assuming you have enough earnings to be able to make the payment. 

If you have no earnings at all then you can pay in £2,880, which will then be grossed up to £3,600. You can do this once each tax year. 

Good_Money

Yes, I am still in employment. This is a separate pension pot to the one I have through my employer.

p00hsticks

Check with your particular provider, but as I understand it, your pension pot should now be split into two parts - one 'crystallsed' (in drawdown) and the other 'uncrystalised'.
 
So in order to take £6k tax free, from a £60k pot, the pension provider would have separated out £24k of that pot, with you then being able to take 25% (6k) tax free and the remaining £18k being left as a separate 'crystallised' pot, which will all be taxable when you take it. 

The remaining £36k stays is a separate pot and (under current rules) you will still be able to take 25% of that pot tax free if and when you want to. 

If invested in funds, the value of both pots will continue to rise and fall with the market. 

Any new money you add would go into the uncrystalised pot. 

ali_bear

Another option worth considering is to increase your current workplace pension contributions, and use your savings to supplement your decreased income. 

Albermarle

p00hsticks said:

Check with your particular provider, but as I understand it, your pension pot should now be split into two parts - one 'crystallsed' (in drawdown) and the other 'uncrystalised'.
 
So in order to take £6k tax free, from a £60k pot, the pension provider would have separated out £24k of that pot, with you then being able to take 25% (6k) tax free and the remaining £18k being left as a separate 'crystallised' pot, which will all be taxable when you take it. 

The remaining £36k stays is a separate pot and (under current rules) you will still be able to take 25% of that pot tax free if and when you want to. 

If invested in funds, the value of both pots will continue to rise and fall with the market. 

Any new money you add would go into the uncrystalised pot. 

The only difference between providers, is that some will have two clearly separate pots - uncrystallised and crystallised.
Some just have one pot, but there will be a % figure as to how much of it is crystallised.


For general info some providers, will only allow you to take the full 25% tax free in one go ( mainly older pensions) but as the OP was able to take part of the tax free cash already, obviously this does not apply.