Taking my tax free lump sum and converting to a drawdown

houndluff

Hello,

I'm thinking about converting a SIPP I've got to a drawdown pension and taking 25% tax free, in order to pay off a mortgage.

But I intend to continue to contribute to another SIPP I have with my current employer.  If I've read the rules correctly, I can still do this.  Plus, as long as I don't take any taxable income from the drawdown pension I can still contribute more than £10,000 a year to the SIPP (which I currently do).

I just want to check my understanding is correct, and I'm not missing anything obvious before I do this.

Thanks

Mark

SVaz

Yes, that’s correct. 

RogerPensionGuy

houndluff said:

Hello,

I'm thinking about converting a SIPP I've got to a drawdown pension and taking 25% tax free, in order to pay off a mortgage.

But I intend to continue to contribute to another SIPP I have with my current employer.  If I've read the rules correctly, I can still do this.  Plus, as long as I don't take any taxable income from the drawdown pension I can still contribute more than £10,000 a year to the SIPP (which I currently do).

I just want to check my understanding is correct, and I'm not missing anything obvious before I do this.

Thanks

Mark

The link below maybe helpful to read. 

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Money purchase annual allowance (MPAA) | MoneyHelper https://share.google/MNQH4cP5tvlrgJHaW

poseidon1

houndluff said:

Hello,

I'm thinking about converting a SIPP I've got to a drawdown pension and taking 25% tax free, in order to pay off a mortgage.

But I intend to continue to contribute to another SIPP I have with my current employer.  If I've read the rules correctly, I can still do this.  Plus, as long as I don't take any taxable income from the drawdown pension I can still contribute more than £10,000 a year to the SIPP (which I currently do).

I just want to check my understanding is correct, and I'm not missing anything obvious before I do this.

Thanks

Mark

I suspect that I am going to be a lone voice here, but if you are comfortably paying your current  mortgage, think very carefully about increasing your non income  producing home equity, in exchange for a diminished pension pot that is expected to help support you for the rest of your life.

My own approach both whilst working and in retirement is to retain a mortgage I can  afford whilst amassing income producing pension pots, ISAs , GIAs etc.  My own view is the accumulation of sizeable home equity as a childless singleton makes little fiscal sense, and a  invitation to HMRC to be a primary beneficiary of ones' estate on death. I note from past posts that you are now  a singleton?

As a matter of interest, are you actually finding the mortgage a strain, or is it just the  usual mainstream obsession to be rid of a mortgage ASAP?