Drawing down pension next year. Move from cash to pension now?

DRS1

I have taken professional advice on withdrawing from my pension next year and so I am very confident that it wouldn’t be seen as recycling.

Forgive me if this comes across as pushing a point which you have addressed but your first reaction to the recycling comment suggested you had never heard of recycling and thought someone was talking about the Money Purchase Annual Allowance. So do you have this advice in writing and does it specifically address recycling explaining why it doesn't apply to what you are proposing to do?

If not then I suggest you go through the Royal London checklist and satisfy yourself that it doesn't apply and why it doesn't.

Plenty of people do the sort of thing you are proposing to do. I don't believe anyone has heard of any of those people being caught by HMRC for "recycling". So you may be OK. But it would be more comforting to be able to say I am definitely OK because of X.

ali_bear

I would offer a contradicting opinion and suggest that you don't access any pension cash until you retire. A mortgage is still the cheapest form of borrowing there is, even after your fixed-rate deal comes to an end. You can increase it if needed to pay for the house improvements.

Keep doing the salary sacrifice thing to avoid paying HRT on earnings.

If the mortgage bothers you make overpayments to bring it down more rapidly.

Ballard

Thanks for your comment @DRS1. I’ve looked at that checklist and I don’t expect my contributions to increase by 30%. Either before or after this drawdown.

As a result, have contributions increased by more than 30% of what might
have been expected?

Am I missing something?

Ballard

https://forums.moneysavingexpert.com/discussion/comment/82097090#Comment_82097090

I have considered continuing with the mortgage and will have a plan in place to refix at the end of the year but won’t be committing to it. It is something that I’ll be giving a lot of thought to over the next few months.

I paid off my first mortgage at 41 and loved the freedom of being completely debt free.

I could potentially pay for the building work with cash, refix the mortgage and then make a c£10-15k repayment on day one.

Ballard

I’m glad that I posted this question as people have raised thoughts and ideas that are interesting.

DRS1

https://forums.moneysavingexpert.com/discussion/comment/82097107#Comment_82097107

That is certainly the sort of concrete "reason I'm not caught" that you would want to be able to rely on.

You did read their bit on the 5 year period?

Albermarle

I'm also thinking of getting solar panels with a battery and aircon installed

Unsurprisingly at the moment there are very long lead times for getting aircon installed and this is unlikely to get much better, even in the Winter. So you will need to plan ahead many months.

NormalNorman

https://forums.moneysavingexpert.com/discussion/comment/82097026#Comment_82097026

Yeah, sal sac to min wage then sipp the remainder. Cheers

Ballard

https://forums.moneysavingexpert.com/discussion/comment/82097112#Comment_82097112

My contributions have been relatively steady for the last 5 years, fluctuating between 7.5% & 12.5% a month. I have upped it to 15% simply because I’ve started a new job. My old job matched my 7.5% but the new one doesn’t and I wanted to keep roughly the same amount going in. I did pay an additional £3k in during the last tax year to get me below the 40% tax bracket.

I think that this clause is relevant, and something that I’d need to consider.

The increase in additional contributions is only significant if the total amount is more than 30% of the tax-free cash.

I appreciate your thoughts. It’s given me something to think about.

Ballard

https://forums.moneysavingexpert.com/discussion/comment/82097133#Comment_82097133

I would look into it now if I hadn’t just started a new job. I’ll investigate properly in the new year, presuming that I pass the 6 month probation.