Pension advice

Galf

I am 63, self employed and already receive a local authority pension. Can I still pay into a sipp and, if I can, how do I receive my pension relief? I intend to stop working in a couple of years so is this worth it or should I just continue to save in my ISA? Would welcome any thoughts and advice.

Marcon

https://forums.moneysavingexpert.com/discussion/6659295/pension-advice

You certainly can. A SIPP is a relief at source scheme, which means you get basic rate tax relief added automatically by the provider. Helpful reading: https://www.litrg.org.uk/pensions/paying-pensions/tax-relief-pension-contributions

Is it worth it? Depends on your objectives but you'll get basic rate tax relief added to your SIPP contributions even if you're a non-taxpayer, which is always worth taking into consideration. The fact you'll only be working (and thus have 'relevant earnings') for another few years shouldn't be a deterrent. Remember too that once you stop work you can pay in £3,600 (gross - in practice you'd contribute ££2,880 and the provider would add the tax relief) each year. Tax relief on personal contributions stops at age 75.

MallyGirl

you can contribute up to your self employed profit gross - even if you didn't pay tax on some of it

Galf

Thank you. That's very helpful. If I pay in less than £10000 in the two years will it count a a small pension pot and will I therefore be able to take it all as a lump sum in two years even though I already receive a local authority pension and have taken the lump sum for that when 60.

Marcon

https://forums.moneysavingexpert.com/discussion/comment/81920573#Comment_81920573

You can take it as a lump sum whatever its value. 25% will be tax free and the rest taxed at your marginal rate.

The 'small pot regime' is only relevant where someone wants to avoid triggering the Money Purchase Annual Allowance (which would limit future pension contributions to a DC pension of no more than £10K per annum, including tax relief, and employer contributions if any) and/or has already reached the Lump Sum Allowance of £268,275 and wants to squeeze a bit more tax free cash out of the system.