Is there a maximum transfer allowance into a SIPP?

mikrt

My employer has recently been taken over, and employees have been switched to a new pension provider. 

I decided to move my old pension into a SIPP with ii due to it's low fees, transfer still in progress.

I am now seeing maximum tax free allowance £60,000 contributions warnings.

I will be transferring 20 odd years of pension, and am hoping I haven't made a masive error as I'm transferring way over the £60,000 limit.

I have googled for more info, but all I can find is pertaining to contribution amount, not transfer amount.

Am I transferring in too much, and do I need to put a stop to it please?

vacheron

No, The £60,000 is the maximum amount you can contribute from salary per year and still recieve tax relief. You can transfer as much as you like from an existing employer DC scheme into a SIPP.

There used to be a total Lifetime Allowance of £1,073,100 as the maximum value your pension could reach without facing an extra tax charge, but this was recently abolished.

The only exception is if your money is in an DB (Defined Benefit or Final Salary) pension, to move this you need to take independent advice if the transfer value is over £30,000.... and the answer most often is to leave it where it is.

Dazed_and_C0nfused

mikrt said:

My employer has recently been taken over, and employees have been switched to a new pension provider. 

I decided to move my old pension into a SIPP with ii due to it's low fees, transfer still in progress.

I am now seeing maximum tax free allowance £60,000 contributions warnings.

I will be transferring 20 odd years of pension, and am hoping I haven't made a masive error as I'm transferring way over the £60,000 limit.

I have googled for more info, but all I can find is pertaining to contribution amount, not transfer amount.

Am I transferring in too much, and do I need to put a stop to it please?

The £60,000 is the annual allowance relating to contributions.  Nothing whatsoever to do with transfers.

mikrt

Thank you so much @Dazed_and_C0nfused and @vacheron for superfast replies.

I can now enjoy the rest of my weekend 

tetrarch

One thing to consider is the mechanism by which it is transferred

I recently consolidated three pensions into ii for exactly the reasons you cite.

You should check whether ii and current provider will allow an in-specie transfer (i.e. retainlng your current investments)

Two of my transferred pensions did not allow this. Instead the pensions were encashed and the proceeds sent to ii. to my disappointment this process is NOT instantaneous, furthermore there is no way to expedite the process by paying a CHAPS fee - this means that your funds are "out of the market" for a number of days and you are not earning any interest on them either. Plus when the funds are received then you will have to make a new investment decision in a currently volatile market

Regards

Tet

mikrt

Thank you @tetrarch, I already foresaw issues with investment transfer and converted to cash immediately beforehand. 

You're dead right about the frustrating amount of time disinvested while transfer is ongoing. 

LHW99

vacheron said:

No, The £60,000 is the maximum amount you can contribute from salary per year and still recieve tax relief. You can transfer as much as you like from an existing employer DC scheme into a SIPP.

There used to be a total Lifetime Allowance of £1,073,100 as the maximum value your pension could reach without facing an extra tax charge, but this was recently abolished.

The only exception is if your money is in an DC (Final Salary) pension, to move this you need to take independent advice if the transfer value is over £30,000.... and the answer most often is to leave it where it is.

For the benefit of anyone reading a Final Salary scheme is DB (not DC)

Marcon

LHW99 said:

vacheron said:

The only exception is if your money is in an DC (Final Salary) pension, to move this you need to take independent advice if the transfer value is over £30,000.... and the answer most often is to leave it where it is.

For the benefit of anyone reading a Final Salary scheme is DB (not DC)

...and you would also need advice where a DC scheme has a transfer value of £30K+ and 'safeguarded benefits' (some form of promise such as a guaranteed annuity rate).

Albermarle

mikrt said:

Thank you @tetrarch, I already foresaw issues with investment transfer and converted to cash immediately beforehand. 

You're dead right about the frustrating amount of time disinvested while transfer is ongoing. 

In fact it is usually better not to convert to cash your self, as this means you are longer out of the market ( which can be good or bad).

If for example a transfer takes 3 weeks, your investments would normally only be liquidated to cash by the provider towards the end of the process. 

Marcon

vacheron said:

No, The £60,000 is the maximum amount you can contribute from salary per year and still recieve tax relief. 

Probably worth clarifying this, given how often the query comes up. The maximum tax-relievable personal contribution someone can make is the lower of their earnings in the tax year, or the 'annual allowance' of £60K (could be salary, or profits from self employment). If you're contributing to a Relief at Source scheme (such as a SIPP), the provider claims basic rate relief and adds it to your 'pot', so the amount you would actually pay in is 80% of your earnings.

Any employer contributions would reduce the amount of tax-relievable personal contributions someone could make - they would all count towards the annual allowance

If you can use carry forward, higher contributions may be possible. Rather than reinventing the wheel, see https://forums.moneysavingexpert.com/discussion/comment/81543169#Comment_81543169?utm_source=community-search&utm_medium=organic-search&utm_term=carry+forward

DRS1

Just going back to the OP's question why would ii be flashing up warnings about £60k max contributions when the OP is doing a transfer?

Has anyone else doing a transfer of a pension to ii seen this?

It does make me think of posts where people have got ISA transfers wrong by withdrawing from one ISA and contributing to another instead of doing a proper transfer.  Presumably that is not what the OP has done here?  But could there be something within ii which thinks he has?  If I was the OP I'd be asking ii just to be sure it was all OK.