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  • FIRST POST
    • ChrisK.....
    • By ChrisK..... 10th Aug 18, 12:21 PM
    • 299Posts
    • 121Thanks
    ChrisK.....
    Does a pension scheme terminate is you make a withdrawal?
    • #1
    • 10th Aug 18, 12:21 PM
    Does a pension scheme terminate is you make a withdrawal? 10th Aug 18 at 12:21 PM
    I'm 59 and have a pension scheme and an ISA and I'm wondering whether to shift so my ISA savings into my pension bearing in mind that I call always withdraw it if I need it because I'm over 55 my question is if you make a withdrawal against a pension are you still allowed to carry on investing in it afterwards or does it terminate the pension scheme itself
Page 1
    • MallyGirl
    • By MallyGirl 10th Aug 18, 12:32 PM
    • 3,133 Posts
    • 8,170 Thanks
    MallyGirl
    • #2
    • 10th Aug 18, 12:32 PM
    • #2
    • 10th Aug 18, 12:32 PM
    If you withdraw anything taxable you are limited to 4k a year contributions from then on

    take a look at MPAA info
    • Marcon
    • By Marcon 10th Aug 18, 12:50 PM
    • 560 Posts
    • 415 Thanks
    Marcon
    • #3
    • 10th Aug 18, 12:50 PM
    • #3
    • 10th Aug 18, 12:50 PM
    I'm 59 and have a pension scheme and an ISA and I'm wondering whether to shift so my ISA savings into my pension bearing in mind that I call always withdraw it if I need it because I'm over 55 my question is if you make a withdrawal against a pension are you still allowed to carry on investing in it afterwards or does it terminate the pension scheme itself
    Originally posted by ChrisK.....
    Why would you want to? Both ISAs and pensions are tax-favoured environments. Withdrawals from your ISA are completely tax free; only 25% of withdrawals from your pension would be tax free.

    Not clear what you're trying to achieve.
    • kidmugsy
    • By kidmugsy 10th Aug 18, 1:12 PM
    • 12,194 Posts
    • 8,637 Thanks
    kidmugsy
    • #4
    • 10th Aug 18, 1:12 PM
    • #4
    • 10th Aug 18, 1:12 PM
    Why would you want to?...

    Not clear what you're trying to achieve.
    Originally posted by Marcon
    (i) If he pays tax at 20% then the money is worth 6.25% more in a pension (less any charges involved).

    (ii) If he doesn't currently use up all his personal allowance, or expects not to in future, the pension is even more valuable.

    (iii) There are also advantages in IHT, bankruptcy and dole collecting.
    Free the dunston one next time too.
    • Blackbeard of Perranporth
    • By Blackbeard of Perranporth 10th Aug 18, 1:29 PM
    • 5,606 Posts
    • 33,160 Thanks
    Blackbeard of Perranporth
    • #5
    • 10th Aug 18, 1:29 PM
    • #5
    • 10th Aug 18, 1:29 PM
    Yes you can move it to a pension, but once you withdraw, the pension is then limited to how much you can put back in.
    Cardiac Arrest - Electrical - Patient unconscious! Heart Attack - Plumbing - Patient conscious!
    Defibrillators Cannot Cure a Heart Attack!
    • Marcon
    • By Marcon 10th Aug 18, 1:42 PM
    • 560 Posts
    • 415 Thanks
    Marcon
    • #6
    • 10th Aug 18, 1:42 PM
    • #6
    • 10th Aug 18, 1:42 PM
    (i) If he pays tax at 20% then the money is worth 6.25% more in a pension (less any charges involved).

    (ii) If he doesn't currently use up all his personal allowance, or expects not to in future, the pension is even more valuable.

    (iii) There are also advantages in IHT, bankruptcy and dole collecting.
    Originally posted by kidmugsy
    Given the naivety (and I don't mean that in a critical sense) of the question, it might have been more helpful to have let OP answer for himself rather than having someone else second guess. I rather doubt those 3 reasons were all top of his mind!
    • 232607
    • By 232607 10th Aug 18, 3:23 PM
    • 124 Posts
    • 62 Thanks
    232607
    • #7
    • 10th Aug 18, 3:23 PM
    • #7
    • 10th Aug 18, 3:23 PM
    (i) If he pays tax at 20% then the money is worth 6.25% more in a pension (less any charges involved).

    (ii) If he doesn't currently use up all his personal allowance, or expects not to in future, the pension is even more valuable.

    (iii) There are also advantages in IHT, bankruptcy and dole collecting.
    Originally posted by kidmugsy
    A better way would be to drip it in the pension via salary sac if available.
    The OP could elect to put themself on NMW then use money from the ISA to make up the reduction in income until the ISA is exhausted.
    Assuming they are in the 20% tax bracket, they'd be losing approx 66p net pay for every 1 that goes in the pension. Assuming they draw out of the pension in the same tax bracket, they'd get 85p after tax giving a whooping 29% uplift. More if they draw out in a lower tax bracket.

    Happy days.
    • Marcon
    • By Marcon 10th Aug 18, 3:25 PM
    • 560 Posts
    • 415 Thanks
    Marcon
    • #8
    • 10th Aug 18, 3:25 PM
    • #8
    • 10th Aug 18, 3:25 PM
    ...but we still don't know what he's trying to achieve...
    • 232607
    • By 232607 10th Aug 18, 3:28 PM
    • 124 Posts
    • 62 Thanks
    232607
    • #9
    • 10th Aug 18, 3:28 PM
    • #9
    • 10th Aug 18, 3:28 PM
    ...but we still don't know what he's trying to achieve...
    Originally posted by Marcon
    I think he's trying to maximise his money.
    Being over 55 takes away the problem of not being able to access the money hence it starts to become simple calculations on how to do this best.
    • ChrisK.....
    • By ChrisK..... 10th Aug 18, 8:40 PM
    • 299 Posts
    • 121 Thanks
    ChrisK.....
    Actually reason 1!

    Puzzled as to why you think I had NO reason when that's a glaringly obvious one

    Given the naivety (and I don't mean that in a critical sense) of the question, it might have been more helpful to have let OP answer for himself rather than having someone else second guess. I rather doubt those 3 reasons were all top of his mind!
    (i) If he pays tax at 20% then the money is worth 6.25% more in a pension (less any charges involved).

    (ii) If he doesn't currently use up all his personal allowance, or expects not to in future, the pension is even more valuable.

    (iii) There are also advantages in IHT, bankruptcy and dole collecting.
    Originally posted by kidmugsy
    Originally posted by Marcon
    • ChrisK.....
    • By ChrisK..... 10th Aug 18, 8:41 PM
    • 299 Posts
    • 121 Thanks
    ChrisK.....
    Precisely........................

    I think he's trying to maximise his money.
    Being over 55 takes away the problem of not being able to access the money hence it starts to become simple calculations on how to do this best.
    Originally posted by 232607
    • Scrounger
    • By Scrounger 10th Aug 18, 9:07 PM
    • 747 Posts
    • 362 Thanks
    Scrounger
    The OP could pay 8000 into a SIPP, wait a few weeks for 2000 tax relief to be added and then withdraw the lot using the Small Pots Rule.

    Repeat up to 3 times - about 500 profit each time and doesn't trigger the MPAA.
    Scrounger
    • bluenose1
    • By bluenose1 10th Aug 18, 9:58 PM
    • 2,016 Posts
    • 3,242 Thanks
    bluenose1
    The OP could pay 8000 into a SIPP, wait a few weeks for 2000 tax relief to be added and then withdraw the lot using the Small Pots Rule.

    Repeat up to 3 times - about 500 profit each time and doesn't trigger the MPAA.
    Scrounger
    Originally posted by Scrounger
    Just thinking. My BIL is 54 a civil servant and a basic rate tax payer. Am I correct in thinking he could use his savings to open 3 different x 8K SIPP this year and cash the 3 out next year making 500 profit x 3?
    Also is it worth him using his savings to top up the equivalent of his annual earnings into a SIPP to get 25% tax free. I take it the disadvantage is when he cashes it in it is classed as crystallised?
    Or am i totally misunderstanding, which wouldn't surprise me.
    Money SPENDING Expert

    • Scrounger
    • By Scrounger 10th Aug 18, 10:56 PM
    • 747 Posts
    • 362 Thanks
    Scrounger
    Just thinking. My BIL is 54 a civil servant and a basic rate tax payer. Am I correct in thinking he could use his savings to open 3 different x 8K SIPP this year and cash the 3 out next year making 500 profit x 3?
    Originally posted by bluenose1
    Depending on earnings it would probably be more practical to do it over 2 or (even 3 years ) as he would need sufficient income to cover the total fund value ie 30k but then to cash it all in would then push him into the 40% band. Also factor in existing pension contributions.


    Also is it worth him using his savings to top up the equivalent of his annual earnings into a SIPP to get 25% tax free. I take it the disadvantage is when he cashes it in it is classed as crystallised?
    Or am i totally misunderstanding, which wouldn't surprise me.
    Originally posted by bluenose1
    Makes sense to me if he can afford it.
    Scrounger
    • bluenose1
    • By bluenose1 11th Aug 18, 7:24 AM
    • 2,016 Posts
    • 3,242 Thanks
    bluenose1
    Depending on earnings it would probably be more practical to do it over 2 or (even 3 years ) as he would need sufficient income to cover the total fund value ie 30k but then to cash it all in would then push him into the 40% band. Also factor in existing pension contributions.
    Makes sense to me if he can afford it.
    Scrounger
    Originally posted by Scrounger
    Many thanks Scrounger. He has 50k sitting in premium bonds so may as well do it up to his earnings level minus pension deductions.
    Would be worth myself opening three pension pots of 8k as at moment I am putting a large part of my income into my works D.C. scheme but will wait until I am closer to 55.
    Money SPENDING Expert

    • Scrounger
    • By Scrounger 11th Aug 18, 8:45 AM
    • 747 Posts
    • 362 Thanks
    Scrounger
    He has 50k sitting in premium bonds so may as well do it up to his earnings level minus pension deductions.
    Originally posted by bluenose1
    He could miss out on a 1 million prize
    ... at moment I am putting a large part of my income into my works D.C. scheme...
    Originally posted by bluenose1
    Salary Sacrifice ?

    Scrounger
    • bluenose1
    • By bluenose1 11th Aug 18, 2:01 PM
    • 2,016 Posts
    • 3,242 Thanks
    bluenose1
    He could miss out on a 1 million prize
    Salary Sacrifice ?

    Scrounger
    Originally posted by Scrounger
    Ha, that is why he says he keeps the money in Premium Bonds. I've told him he can put it back in when he cashes in the SIPP.
    If he puts 8k in a couple of weeks before his 55th birthday he can withdraw it as soon as he hits 55 I assume. Might be able to time it so he only skips a month.

    I am getting salary sacrifice on my DC pension contributions. Can't believe how good it is and just wish I had realised sooner. Oh well better late than never. Should be able to afford to go at 55.
    Money SPENDING Expert

    • Scrounger
    • By Scrounger 11th Aug 18, 9:35 PM
    • 747 Posts
    • 362 Thanks
    Scrounger
    I am getting salary sacrifice on my DC pension contributions.

    Should be able to afford to go at 55.
    Originally posted by bluenose1
    Well done!

    Scrounger
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