Help with recycling rules - civil service pension

Newwindows

I am 60 and looking to retire at 65, 18 months before I turn 67.

I am a higher rate tax payer with the civil service paying a standard 7.35% into Alpha. I joined the civil service in October 2020.

In April 2022 I started paying £300 gross pm in the Alpha added pension scheme which I still do. April was the first opportunity to do this following a promotion the previous year and a significant pay rise.

I started drawing a DB pension from previous employment in September 2022 which gave me around £50 tax free and an annual income which is now around £8k pa taxed at 40% at source. I used all of the tax free cash to reduce (not eliminate) my mortgage.

In 2023 I cashed in two small pension pots (SERPS and old AVCs). They were worth around £20k each and I paid tax on them at 40%. Used the money on replacement windows and another chunk off the mortgage.

I have no other pensions.

I have now stopped paying support for kids at university and my mortgage has around a year to go. It’s these two things that mean I now want (or perhaps more to the point am now able) to take out further added pension of £830 gross pm, making a total of £1130 pm. I want to start this in April this year to give me 5 full years of additional contributions before I retire.

I don't think it's relevant but I am single.

So my question is, could any of this be viewed as pension recycling?

I am very grateful in advance for any wisdom! I've read up on the 5 conditions but remain confused. Yes I am not using tax free cash but if I hadn't used it to pay down the mortgage then I wouldn't now be in a position to increase payments. Perhaps that's over-complicating it.

Dazed_and_C0nfused

https://forums.moneysavingexpert.com/discussion/6652995/help-with-recycling-rules-civil-service-pension

What did your research tell you about the Money Purchase Annual Allowance (MPAA)?

Marcon

https://forums.moneysavingexpert.com/discussion/comment/81862784#Comment_81862784

Why would that matter? OP is talking about buying additional (DB) pension in a DB scheme.

Marcon

https://forums.moneysavingexpert.com/discussion/6652995/help-with-recycling-rules-civil-service-pension

Not sure you really mean that the DB pension from previous employment gave you a lump sum of 'around £50' - could there be a 'K' or some noughts missing?!

It's very difficult to give bullet proof answers when it comes to potential recycling, because HMRC gives no really definitive guidance. The saving grace is often that the onus is on them to prove that you took tax free lump sums with a view to recycling - and if you have a robust explanation of why you took tax free cash, and the purpose for which it was used, that proof is always going to be difficult for HRMC to provide.

Newwindows

https://forums.moneysavingexpert.com/discussion/comment/81862865#Comment_81862865

Hi Marcon, yes, £50k! happily quite a bit more than £50. I suppose I have always had intent to pay down my mortgage using my old DB pension. I have also always had intent to increase my overall pension provision once I was able. The two things have never really been connected in my mind until I started getting worried about recycling. thank you.

Yorkie1

https://forums.moneysavingexpert.com/discussion/comment/81862854#Comment_81862854

I note that the OP drew down some small DC pensions a few years ago, including taxable amounts. Would that trigger the MPAA for maximum level of contributions towards a DB scheme?