Whether to topup SIPP immediately prior to retirement

Lowtrawler

https://forums.moneysavingexpert.com/discussion/comment/82125264#Comment_82125264

When I ask Claude, there are no pension recycling cases that have ever gone to First-tier Tribunal or higher court decisions and so litigation for this is non-existent. My concern is, I am clearly in breach of all the rules except pre-planning. The one thing I could do that would show pre-planning is to make this late one-off contribution.

It's worth £2.5k and so not to be sniffed at but would be difficult to defend if HMRC were to query it.

MeteredOut

https://forums.moneysavingexpert.com/discussion/comment/82125279#Comment_82125279

Be wary of asking AI stuff like this. Just because the model used for its next-word prediction did not indicate there has never been any litigation on this, it does not mean that was the case. AI has this immovable confidence that it is always correct - it is typically not self aware enough in its responses to indicate there may be gaps in its model (other than the small print "AI makes mistakes" at the bottom of every page).

That is, unless, the AI provided a link to a reliable source that you have yourself verified.

Lowtrawler

https://forums.moneysavingexpert.com/discussion/comment/82125329#Comment_82125329

It provided me a link to perform my own search. It said it had already looked for the word recycle and come up blank. The response is consistent with my understanding from research of journalist articles. However, I am choosing to be more cautious and avoiding putting myself in a compromising position.

My conclusion from this thread is anyone who can make a lump-sum contribution into their pension immediately prior to retirement without breaching the recycling rules should probably do so. For me, it is not the right thing to do because of the recycling rules.

mrklaw

recycling is horribly grey even with the 7 step flowchart thingy. Relies too much on interpretation and do you want to be on the wrong side of that? however I do think we overthink it and its mainly designed for obvious infractions.

I’d put ‘pile redundancy into pension before retiring’ and ‘put any spare cash into pension before retiring’ as technically preplanned but preplanned based on excess cash being available, not as a result of taking tax free cash - which is the primary reason for recycling rules to exist.

on that basis I think you’d be fine. But if its a relatively low boost, doesn’t hurt to have a bit of cash in an ISA for cashflow management and smoothing things out?

Triumph13

"My conclusion from this thread is anyone who can make a lump-sum contribution into their pension immediately prior to retirement without breaching the recycling rules should probably do so"

With the possible exception of those who will already be using up their full £268k PCLS limit.

Albermarle

https://forums.moneysavingexpert.com/discussion/comment/82125422#Comment_82125422

 however I do think we overthink it and its mainly designed for obvious infractions.

AIUI the legislation was designed following criminal gang activity in this area, involving large scale exploitation of getting the tax free twice. I have no idea of the details of how it worked, but that seems to be the original reason for the recycling rules.