Adding to stakeholder pension once retired

Tree_pipe99

My wife is considering adding to her (untouched) stakeholder pension, even though she's now retired. The money to add would come from her savings. She currently has income from a small DB pension and some income from savings (none of this is above the income tax or savings tax thresholds).

Obviously there would be no additional employer contributions, but if I've read it right, the government adds some basic rate tax relief for those with low or no earnings.

Her stakeholder pension is actually performing very well (this year around 15%+ gains) and rules for this particular pension seem to allow one off additional payments, so to me it looks like a good decision to move some money from savings to pension. 

Am I missing anything obvious? Thanks for any help or suggestions.

I should add - she has about 9 years before state pension kicks in, so the stakeholder pension is still a long term investment. 

xylophone

You do not mention a state pension so presumably your wife is under  SPA  and under age 75.

Has your wife obtained a state pension forecast?

Does it show that she has qualified for a full NSP? If not, she might wish to consider whether voluntary NI contributions would be to her benefit.

https://www.gov.uk/check-state-pension

In terms of the stakeholder pension,  even though she has no relevant uk earnings, she could contribute up to £2880 per tax year; the pensioner provider would claim up to £720 from HMRC and add it to her account. 

https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm044100

Tree_pipe99

xylophone said:

You do not mention a state pension so presumably your wife is under  SPA  and under age 75.

Has your wife obtained a state pension forecast?

Does it show that she has qualified for a full NSP? If not, she might wish to consider whether voluntary NI contributions would be to her benefit.

https://www.gov.uk/check-state-pension

In terms of the stakeholder pension,  even though she has no relevant uk earnings, she could contribute up to £2880 per tax year; the pensioner provider would claim up to £720 from HMRC and add it to her account. 

https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm044100

Thanks. I added the state pension info in an edit. She has about 9 years before state pension starts.

She does have some years missing from national insurance contributions, but when I last looked at it, she wasn't eligible to top up contributions. This was a few years ago, so not sure if the last few years could also be topped up? I'll look into that, thanks. 

Nebulous2

She can add £2880 as said, which will be grossed up to £3600 with tax relief. 

Once she begins to draw her state pension she will be over the tax threshold and will be able to take 25% tax-free from her pension, but the rest will be taxed. 

At the moment if she has unused tax allowance she should consider drawing money out, while she can still get it tax-free. If she has unused ISA allowance she could put it there, and invest it in the same funds as the pension has if she wants to stay in the market. 

I was the primary earner during our lives, and it never really bothered me that we couldn't use my wife's tax allowance. Somehow, now that we are in the gap before state pension it is more annoying that she can't use it. 

SVaz

She should be drawing ( to use up any spare personal allowance AND contributing £3600 ( £2880 personal net)  
That’s what my Wife is doing,  she draws £6k a year into an ISA and also contributes as much as is allowed. 

kermchem

Tree_pipe99 said:

xylophone said:

You do not mention a state pension so presumably your wife is under  SPA  and under age 75.

Has your wife obtained a state pension forecast?

Does it show that she has qualified for a full NSP? If not, she might wish to consider whether voluntary NI contributions would be to her benefit.

https://www.gov.uk/check-state-pension

In terms of the stakeholder pension,  even though she has no relevant uk earnings, she could contribute up to £2880 per tax year; the pensioner provider would claim up to £720 from HMRC and add it to her account. 

https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm044100

Thanks. I added the state pension info in an edit. She has about 9 years before state pension starts.

She does have some years missing from national insurance contributions, but when I last looked at it, she wasn't eligible to top up contributions. This was a few years ago, so not sure if the last few years could also be topped up? I'll look into that, thanks. 

First, she should check her state pension forecast to see how much she entitlement she has now, and how much she can buy between now and when she does retire.

Do the calculation of cost versus return to check if she can pay to make up the most recent missing years, and make voluntary contributions for the 9 years to state pension age.

Tree_pipe99

I did previously look at starting to drawdown on the stakeholder pension to use her personal allowance, but the stakeholder pension is quite small, so it would be gone within a few years. It does make sense to take it out tax-free and then invest in something similar. I'll give this some thought.

I've had a look at NI top ups and she can do it for previous 2 years. If she keeps doing it for the next 5 years it will get her to full state pension. So this look a definite one to do. Thanks to everyone that suggested looking at this.