Paying £2880 into pension when retired

traceyaj wrote: »

I have received the risk questionnaire from HL before I make a withdrawal from my Sipp. I will probably withdraw the majority and just leave £1000 to leave the SIPP open.

However I still do not understand the difference between leaving for example £5000 cash in the SIPP or moving £5000 into drawdown.
Can anyone enlighten me please?

If retired and using an HL SIPP and leaving as cash, and drawing out when tax relief added, I think it is best to pay in £2,880 and after the £720 tax relief is added, draw out the full £3,600 by UFPLS as long as you already have £1,000 left in the account. Each subsequent year, repeat the process, by paying in £2,880, wait for tax relief to be added, and draw out the £3,600 by UFPLS.

Hi all, quick question if I may....... OH is about to retire and will be taking his DB pension. The SIPP is unneeded at present so will not be put into drawdown. How much (if anything) can he pay into his existing SIPP to gain tax relief. He will be paying 20% tax rate

xylophone wrote: »

He has earned income for around six months of this tax year and will have no more earned income in this tax year?

How much gross earned income will he have had?

How much gross has he already contributed to his pension(s) in this tax year?

Thank you. OH is under instruction to bring home the info today so will update later........was thinking for other years going forward as a general rule though more than this one specifically.

Your thoughts are perfectly reasonable.

A couple of important things to understand:

1. As a non-tax payer without any earned income(???) she can only deposit £2880 per year
2. If you deposit £2880, no further contributions this tax year
3. Set up the £100pm regular payments from an account with your wife's name on

You do not lose any tax advantage, you are simply deferring the possible tax. The important thing to consider in your scenario is whether waiting until SP age and withdrawing from the SIPP would incur any additional tax liabilities and whether to withdraw some before SP age and continue with top-ups would be more beneficial from a tax perspective.

EDIT: Example.... Currently as your wife appears to have no taxable income(???; interest???) you could withdraw all of the SIPP money (up to personal allowance) and not incur any income tax; you would be subject to reduced pension contributions of £4k but as a non-earner this wouldn't affect your wife (unless she got a job). Alternatively, leave the SIPP contributions in the SIPP continue with contributions and at / after SP age start withdrawing from the SIPP. If you only withdraw up to the personal allowance (currently £12500) then you could (assuming enough pension money) withdraw £4666.66pa from the SIPP without incurring any tax via uncrystallised withdrawals. The example uses rounded numbers; SP of £9k, leaving £3.5k plus the 25% TFLS equals £4666.66. Total pension £16666.66.

Hi

The bit you quoted relates to making pension contributions, not withdrawals. In my example:

cloud_dog wrote:

Example.... Currently as your wife appears to have no taxable income(???; interest???) you could withdraw all of the SIPP money (up to personal allowance) and not incur any income tax; you would be subject to reduced pension contributions of £4k but as a non-earner this wouldn't affect your wife (unless she got a job).

As soon as you withdraw £1 more than the 25% TFLS the reduced £4k contribution allowance comes in to effect.

In the above example, I am unsure if withdrawing by the 'small pot' rule, with a pot less than £10k, would trigger the £4k contribution allowance or not. Would need to investigate that. For the OP it is mute anyway (based on what we know atm).