Paying into a SIPP at age 70
busy_dad
Posts: 63 Forumite
Hi all,
My dad is now 70 and is drawing state pension and a workplace pension. He is a basic rate taxpayer.
He holds stocks and shares ISA investments and asked me if he can put any of this into a SIPP to get tax relief.
I know it can be done, but are there any pitfalls? (he doesn't need access to the money). He would get tax relief going in and 25% tax free on the way out? On the face of it, it seems like a no brainer, but I am sure we are missing something. I do understand you no longer need to take an annuity at age 75.
I know you can normally pay in your annual earnings into a pension (up to £40000), but not sure what the rules are if your income is your pension (is this recycling?)
Sorry my pensions knowledge isn't great - I am not usually on the pensions board!
Thanks
My dad is now 70 and is drawing state pension and a workplace pension. He is a basic rate taxpayer.
He holds stocks and shares ISA investments and asked me if he can put any of this into a SIPP to get tax relief.
I know it can be done, but are there any pitfalls? (he doesn't need access to the money). He would get tax relief going in and 25% tax free on the way out? On the face of it, it seems like a no brainer, but I am sure we are missing something. I do understand you no longer need to take an annuity at age 75.
I know you can normally pay in your annual earnings into a pension (up to £40000), but not sure what the rules are if your income is your pension (is this recycling?)
Sorry my pensions knowledge isn't great - I am not usually on the pensions board!
Thanks
0
Comments
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He is limited to contributing £2880 (£3600 by the time the pension provider has claimed basic rate tax on his behalf and added this to the pot) as he has no actual earnings.
Making contributions funded by your pension isn't counted as recycling - that only applies to any tax free lump sums you have taken from your pension.Googling on your question might have been both quicker and easier, if you're only after simple facts rather than opinions!0 -
The cap on pension contributions for non-earners is £2880 net (£3600 gross) p.a. This cap applies to your dad (as he has zero earned income). He can make this annual contribution until he reaches age 75.
Yes, he can benefit from the tax uplift on the way in. He can also benefit from the 25% TFC on the way out.0 -
He is limited to contributing £2880 (£3600 by the time the pension provider has claimed basic rate tax on his behalf and added this to the pot) as he has no actual earnings.
Making contributions funded by your pension isn't counted as recycling - that only applies to any tax free lump sums you have taken from your pension.
... or will be taking in the next 2 years!!!0
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