Age 62 new pension ?

MouldyOldDough

Is it possible/worth doing - to set up a new pension at age 62 ?

I am disabled and taking an ill health pension from a government job - and have expectations to receive a full state pension (contributions being paid by DWP) in 5 years.

I have a fair amount of spare cash having a large lump sum invested in an ISA - but can I put some of this into another pension and gain on tax ?

MallyGirl

If you have no earnings then you can put £2880 into a pension and get £720 tax relief to bring it up to £3600. 

QrizB

MouldyOldDough said:

Is it possible/worth doing - to set up a new pension at age 62 ?

Yes, you can continue paying into a pension until you are 75.

MouldyOldDough said:

I am disabled and taking an ill health pension from a government job - and have expectations to receive a full state pension (contributions being paid by DWP) in 5 years.

If you have no employment income, and are not a Director of a company, you will be able to pay £3600 gross / £2880 net into a pension each year. You could have been doing this ever since you ceased employment.

MouldyOldDough said:

I have a fair amount of spare cash having a large lump sum invested in an ISA - but can I put some of this into another pension and gain on tax ?

Yes, as above, up to £2880 net / £3600 gross per tax year, until you reach 75.

MouldyOldDough

MallyGirl said:

If you have no earnings then you can put £2880 into a pension and get £720 tax relief to bring it up to £3600. 

I was unaware of the fact that this is possible....

I have no earnings/income through work - only pensions/ pip

So the funds will be increased by 25% and will be fully accessible to me in 5 years time ?

SacredStephan

MouldyOldDough said:

I was unaware of the fact that this is possible....

I have no earnings/income through work - only pensions/ pip

So the funds will be increased by 25% and will be fully accessible to me in 5 years time ?

The funds are accessible now as you are over 55. Have you checked your state pension forecast using your Personal Tax Account?

SVaz

If your ill health pension doesn’t use up all your personal allowance of £12570,  you would be better taking the new pension every year,  either in part or the lot.   Even if you don’t need it you can stick it in an ISA.
PiP isn’t taxable income so doesn’t count towards personal allowance. 

£900 of the £3600 is tax free anyway. 

MouldyOldDough

SacredStephan said:

MouldyOldDough said:

I was unaware of the fact that this is possible....

I have no earnings/income through work - only pensions/ pip

So the funds will be increased by 25% and will be fully accessible to me in 5 years time ?

The funds are accessible now as you are over 55. Have you checked your state pension forecast using your Personal Tax Account?

What funds ?

I am already receiving an ill health pension..... from my defined benefit pension

MallyGirl

MouldyOldDough said:

SacredStephan said:

MouldyOldDough said:

I was unaware of the fact that this is possible....

I have no earnings/income through work - only pensions/ pip

So the funds will be increased by 25% and will be fully accessible to me in 5 years time ?

The funds are accessible now as you are over 55. Have you checked your state pension forecast using your Personal Tax Account?

What funds ?

I am already receiving an ill health pension..... from my defined benefit pension

Anything you put into a personal pension is immediately available to you as you are over 55. You would need to leave it in long enough to get the tax relief applied (takes weeks/months) but then you can get it out again if needed or to use up spare personal allowance 

molerat

MouldyOldDough said:

SacredStephan said:

MouldyOldDough said:

I was unaware of the fact that this is possible....

I have no earnings/income through work - only pensions/ pip

So the funds will be increased by 25% and will be fully accessible to me in 5 years time ?

The funds are accessible now as you are over 55. Have you checked your state pension forecast using your Personal Tax Account?

What funds ?

I am already receiving an ill health pension..... from my defined benefit pension

You put £2880 into a SIPP

HMRC add £920 making £3600 in the pension, that addition may take a couple of months to materialise

As you are over 55 those funds are immediately available to withdraw

You withdraw £3600, £900 tax free and £2700 subject to tax, worst case scenario you are £190 up.

For the first year there are a few hoops to jump through to get the tax situation in order but if you come back here you will get pointed in the right direction.

Rinse and repeat next year.

Do you have any spare tax allowance ?

What about Mrs MOD ?

jim8888

I do wonder where the limit of £2880/£3600 came from? Is it another of these things that should have increased over the years but has stayed nailed to an ever decreasing real value? 

MouldyOldDough

molerat said:

MouldyOldDough said:

SacredStephan said:

MouldyOldDough said:

I was unaware of the fact that this is possible....

I have no earnings/income through work - only pensions/ pip

So the funds will be increased by 25% and will be fully accessible to me in 5 years time ?

The funds are accessible now as you are over 55. Have you checked your state pension forecast using your Personal Tax Account?

What funds ?

I am already receiving an ill health pension..... from my defined benefit pension

You put £2880 into a SIPP

HMRC add £920 making £3600 in the pension, that addition may take a couple of months to materialise

As you are over 55 those funds are immediately available to withdraw

You withdraw £3600, £900 tax free and £2700 subject to tax, worst case scenario you are £190 up.

For the first year there are a few hoops to jump through to get the tax situation in order but if you come back here you will get pointed in the right direction.

Rinse and repeat next year.

Do you have any spare tax allowance ?

What about Mrs MOD ?

I use up all of my tax allowance 

Mrs MOD has a low income - just Carers Allowance - I use £1260 of her tax allowance via Marriage allowance

She should receive max SP in 12 years time (from NI/CA credits) and has around £100,000 in a Private Pension SIPP...