pension minefield.

bestresult94

I am employed by the NHS and contribute to their pension scheme via my wages. I have a pension from a previous employer and applied to transfer it into my NHS pension. I was informed that this was not possible because the NHS scheme only allows a certain amount of time to do this and I was out of time.

Would it be possible (I am 56 years of age) to cash in my old pension (value £10000.00) and simply pay the funds direct into my NHS pension and would it make financial sense to do this? I am aware that I would be taxed on the 75% of my old pension ( tax of 20%) but would I receive a tax increase of 20% on the funds paid into my NHS pension?

Marcon

https://forums.moneysavingexpert.com/discussion/6655930/pension-minefield

You could be caught by the 'pension recycling' rules; and your current earnings limit the amount you can contribute and receive tax relief, so that too would need to be taken into consideration.

Cashing in your old defined contribution (DC) pension would also trigger something called the Money Purchase Annual Allowance*. That would only matter if you planned to pay more than £10K a year (including tax relief on your contributions/any employer contributions) to a DC arrangement. The NHS scheme is a defined benefit scheme, so triggering the MPAA wouldn't have any impact on your membership of the main NHS scheme.

*unless it really is spot on £10K or just under. and permits withdrawals under the 'small pots' regime and you ask for the withdrawal to be done on this basis. In that was the MPAA isn't triggered.

And you thought you'd asked a simple question….!!

Albermarle

Also if you take £7500 in taxable income in one month, the pension provider will take a big chunk of tax from you as it will be on an emergency tax code. You will be able to claim any excess tax back though from HMRC.

If your old pension provider offers the facility to withdraw under the 'Small Pots Rule' and the pot is actually under £10K, then the right amount of tax would be taken in the first place.

JoeCrystal

https://forums.moneysavingexpert.com/discussion/6655930/pension-minefield

Yes, you can only transfer it in within one year of starting at the NHS. If we allow anyone to willy nilly to transfer in funds at any time….