Paying £2880 into pension when retired

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  • damperman
    damperman Posts: 52
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    I am a low rate tax payer. I was thinking of putting in the £2880 each year plus the tax.
  • I am a low rate tax payer

    What do you mean by low rate?

    The basic rate of 20%, the Scottish starter rate of 19% or one of the 0% rates?
  • damperman
    damperman Posts: 52
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    I!!!8217;m a basic rate 20% tax payer.
  • Ignoring any investment gain (or loss) or fees this is how it would work based on current tax rates,

    Pay in £2,880
    Tax relief of £720 added
    Total fund £3,600

    25% TFLS £900
    75% taxable pension income £2,160 (£2,700 less £540 basic rate tax)
    Total received £3060

    Profit £180
  • damperman
    damperman Posts: 52
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    ok Thanks. Worth thinking about.
  • PT18
    PT18 Posts: 22 Forumite
    Hi,
    Can someone please explain in simple terms to me the way drawing from a H&L sipp works. I opened one for the wife (retired now 65 only state pension income) 3 years ago, now has 4 x £2880 in plus the tax rebate fund value should now be £14400 when last tax goes in.
    I enquired on H&L some time ago about drawing from it but as I understood them. Once you draw anything out the account goes into "drawdown" and you cannot put anymore funds into it so if you wanted to do what "zolablue25" suggests you would not be able to without opening another account every year. Have I got this correct ?
  • AnotherJoe
    AnotherJoe Posts: 19,622
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    PT18 wrote: »
    Hi,
    Can someone please explain in simple terms to me the way drawing from a H&L sipp works. I opened one for the wife (retired now 65 only state pension income) 3 years ago, now has 4 x £2880 in plus the tax rebate fund value should now be £14400 when last tax goes in.
    I enquired on H&L some time ago about drawing from it but as I understood them. Once you draw anything out the account goes into "drawdown" and you cannot put anymore funds into it so if you wanted to do what "zolablue25" suggests you would not be able to without opening another account every year. Have I got this correct ?

    Not quite :D

    Here's what my situation is which is similar to yours.

    I had one SIPP with HL with £400k give or take.
    I took out the 25% (£100k obviously)
    I ended up with one account "original SIPP" which was closed to new entries with nothing in it and another "drawdown SIPP" with £300k in it.

    Now, i wanted to add new contribution in a new tax year, i phoned them, they opened up the closed original SIPP (so no need to add a new one) , I added some money, about £15k, and Ive just last week added the £2880 as I'm currently a non taxpayer.

    I believe when i take the 25% out of the "original SIPP", lets say there's £20k in it, then I'll get £5k and the £15k will be routed into my "drawdown SIPP" (It is actually named "SIPP income drawdown" on my summary page. The original is called "SIPP".
  • zolablue25
    zolablue25 Posts: 1,652 Forumite
    Thanks Joe. That's kinda answered my questions and explained why people are suggesting opeing new pensions each time. I didn't realise that once you took the TFLS your pension went into "drawdown" excluding you from adding to it.

    As a follow up...Is there any limit to the number of SIPPs you can have?
  • AnotherJoe
    AnotherJoe Posts: 19,622
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    zolablue25 wrote: »
    Thanks Joe. That's kinda answered my questions and explained why people are suggesting opening new pensions each time. I didn't realise that once you took the TFLS your pension went into "drawdown" excluding you from adding to it.

    As a follow up...Is there any limit to the number of SIPPs you can have?

    75 :D

    Though you could probably get clever and open more via part transfers from one into several.

    But I wouldn't advise it !
  • Deneb
    Deneb Posts: 420
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    AnotherJoe wrote: »
    I had one SIPP with HL with £400k give or take.
    I took out the 25% (£100k obviously)
    I ended up with one account "original SIPP" which was closed to new entries with nothing in it and another "drawdown SIPP" with £300k in it.

    I took a slightly different approach. I crystallised all but £1K of my SIPP, taking the 25% PCLS. The remaining 75% was moved to a SIPP Income Drawdown account, leaving the original SIPP open with the uncrystallised £1K still in it, to which I have continued to add further contributions.

    You could keep repeating this. As long as you leave at least £1K uncrystallised each time, the original SIPP will remain open.
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