NHS Pension and MPAA

s_etty · 29 November 2017 at 6:02PM

Hi,
I am running rings around myself so I thought I would ask on here so I can hopefully get some clarity.

I am currently in the 1995 section of the NHS pension and still contributing. I have also recently discovered a private pension pot of £19k that I had forgotten about (how I did this is beyond me!).

I would like to drawdown this pot in two lumps ( I understand the tax situation regarding emergency coding and claiming the overpaid tax back) in different tax years to avoid going into the higher tax band . I would like to buy additional NHS pension with this money. The NHS pension is a final salary scheme but I am able to buy additional pension.

I am utterly confused, no sorry clueless, around where the Money Purchase Annual Allowance fits into this. I THINK that if I drawdown the private pension I will be liable for tax on my NHS contributions above £4K,including the amount that the employer contributes-is this correct?

Can someone please explain in English how this MPAA thingy will fetch my plans?

Many thanks

Simon

Mnd · 29 November 2017 at 8:36PM

As I understand it, you can take the 25% taxfree lump sum and as long as you don't take any taxable money then you don't come under the MPAA rules
As long as you don't take over £7.5k you will also not fall foul of the recycling rules.
However I don't claim to be an expert and if I'm wrong somebody will correct me

greenglide · 29 November 2017 at 11:08PM

The MPAA only applies to DC schemes so you can continue contributions to the NHS scheme.

Any contributions to personal / private pensions will be subject to it.

See here https://www.aegon.co.uk/support/faq/pension-technical/MPAA.html

cloud_dog · 29 November 2017 at 11:58PM

OP, are you sure you want to put all your eggs in your NHS pension basket?

Is it possible you may want to retire early, or before you are able to access the NHS pension? This PP might prove very useful in allowing some flexibility.

woolly_wombat · 30 November 2017 at 10:36AM

cloud_dog wrote: »

OP, are you sure you want to put all your eggs in your NHS pension basket?

Is it possible you may want to retire early, or before you are able to access the NHS pension? This PP might prove very useful in allowing some flexibility.

Fair point, but the OP is a member of the 1995 section of the NHS pension and therefore has a normal retirement age of 60.

cloud_dog · 30 November 2017 at 12:38PM

woolly_wombat wrote: »

Fair point, but the OP is a member of the 1995 section of the NHS pension and therefore has a normal retirement age of 60.

Ok, fair comment but, the question still stands.

If they are planning / happy to work to 60 and if any transferred in monies can buy additional years, and in what NHS scheme, what is the implication of this?

s_etty · 30 November 2017 at 5:45PM

I am intent on early retirement in a couple of years. I want to use the drawdown money to buy added pension-you buy it in lots of £250, £500 etc. I have enquired at NHS pensions but they are yet to respond in a form of intelligible language. It is very frustrating. It looks like I’ll have to see an IFA as HMRC were useless as well. The lady on the end of the phone at HMRC had to ask a colleague what the tax bands were. Hopeless.

NHS Pension and MPAA

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