Jump to content
DOSBODS
  • Welcome to DOSBODS

     

    DOSBODS is free of any advertising.

    Ads are annoying, and - increasingly - advertising companies limit free speech online. DOSBODS Forums are completely free to use. Please create a free account to be able to access all the features of the DOSBODS community. It only takes 20 seconds!

     

Pension Recycling


Harley

Recommended Posts

Hi.

There are rules to prevent people taking money out of their pension and then putting it back and claiming the relief again (aka "recycling").

However, there are some exemptions - a list of cases/tests where you can do this.

Anyone know of anyone who managed to do this and was there anything that needed to be done before taking the pension?

Link to comment
Share on other sites

  • 1 month later...

It's worth knowing that the rules for defined benefit are a little different.

I've got an old civil service pension that's kicking in at 60. I was worried that it coming into payment would stop me from being able to make future contributions into a separate DB scheme, but apparently not.

 

 

Link to comment
Share on other sites

  • 3 weeks later...
On 23/11/2019 at 13:38, Frank Hovis said:

There is the ?£3k you can out into a SIPP every year from retiring up to the age of 75.

Interesting. Cheers Frank. 

Link to comment
Share on other sites

Quote

The Money Purchase Annual Allowance (MPAA)

The Money Purchase Annual Allowance was introduced on 6th April 2015 and was set at £10,000 gross p.a. The government has now reduced the MPAA to £4,000 gross p.a. which applies to contributions made from 6th April 2017.

If you have taken flexible benefits which include income, such as an ‘Uncrystallised Funds Pension Lump Sum (UFPLS)’ or flexi-access drawdown with income, and you want to continue paying contributions to a defined contribution pension scheme, you will have a reduced annual allowance of £4,000 p.a towards your defined contribution benefits. The reduced allowance will apply if you have withdrawn more than the 25% tax free pension commencement lump sum (PCLS). The reduced amount is known as the ‘money purchase annual allowance' (MPAA) and includes both your own contribution and any other contribution paid on your behalf, such as an employer or a third party. You cannot bring forward any unused annual allowances from the previous three tax years to warrant a higher contribution than £4,000 towards your defined contribution benefits.

The money purchase annual allowance will only start to apply from the day after you have taken flexible benefits and so any previous savings are not affected. 

If you are a non taxpayer (like me) you are restricted to putting in a max of £2880 p.a. :/

Quote

Tax relief if you’re a non-taxpayer

If you have no earnings or earn less than £3,600 a year, you can still pay into a pension scheme and qualify to have tax relief added to your contributions up to a certain amount.

The maximum you can pay is £2,880 a year. Tax relief is added to your contribution so if you pay £2,880, a total of £3,600 a year will be paid into your pension scheme, even if you earn less than this or have no income at all.

This applies if you pay into a personal or stakeholder pension yourself (so not through an employer’s scheme) and with some workplace pension schemes – but not all. The way some workplace pension schemes give tax relief mean that people earning less than the personal allowance (£12,500 in the 2019-20 tax year) won’t get tax relief.

 

Link to comment
Share on other sites

  • 1 month later...
On 11/01/2020 at 13:48, NogintheNog said:

If you are a non taxpayer (like me) you are restricted to putting in a max of £2880 p.a. :/

 

Pays the council tax,straight into SIPP then pulled back out.Not to be sniffed at a free £600.

Link to comment
Share on other sites

On 23/11/2019 at 13:38, Frank Hovis said:

There is the ?£3k you can out into a SIPP every year from retiring up to the age of 75.

Can you do this if you are still working and also paying into a DC scheme? 

Link to comment
Share on other sites

51 minutes ago, ILikeCake said:

Can you do this if you are still working and also paying into a DC scheme? 

If you are still working and paying into a DC scheme then you can go up to the full £40k in your SIPP lees your existing contributions.

This £3.6k is for people who have already retired i.e. are drawing a pesnion.  I'll be doing it when \I get there but don't intend drawing until 65 though retiring now.

This one:

 

Quote

 

Non-earners

You can contribute up to £3,600 each tax year into a pension. But because of tax relief you don’t have to pay in the full amount.

If you pay £2,880, the government automatically adds £720 to bring the total to £3,600.

If you retire at 60 and save the full amount each year up to your 75th birthday, you’d get £10,800 from the government.

 

 

If you haven't formally retired - meraning no retirement event, haven't accessed your pensions, and are still earning something then you have this which is the normal position.

Annual allowance is for all pension contributions for a DC - yours and the employers - and if a DB then it's a multiple of the annual benefit you hvae earned that year.  The rules for the multiplier are very complicated so I haven't even worked them out for me; I just errerd on teh side of cauation. IIRC it's 8 - 12% x benefit earned.

 

 

Quote

 

Still working and haven’t flexibly accessed your pension

Flexibly accessing your pension includes taking a lump sum (an uncrystallised funds pension lump sum, or UFPLS), taking income from a flexible drawdown account or being in flexible drawdown before April 2015. Buying an annuity or just taking your tax-free cash from drawdown won’t count.

Usually, you can invest up to 100% of your earnings into a pension. If your earnings are less than £3,600, you can still pay this much in.

There’s also an annual allowance of £40,000 each tax year. Though your limit might be higher or lower than this.

 

https://www.hl.co.uk/news/articles/archive/reasons-to-pay-into-a-pension-even-after-you-retire

Link to comment
Share on other sites

43 minutes ago, Frank Hovis said:

If you are still working and paying into a DC scheme then you can go up to the full £40k in your SIPP lees your existing contributions.

This £3.6k is for people who have already retired i.e. are drawing a pesnion.  I'll be doing it when \I get there but don't intend drawing until 65 though retiring now.

This one:

 

 

If you haven't formally retired - meraning no retirement event, haven't accessed your pensions, and are still earning something then you have this which is the normal position.

Annual allowance is for all pension contributions for a DC - yours and the employers - and if a DB then it's a multiple of the annual benefit you hvae earned that year.  The rules for the multiplier are very complicated so I haven't even worked them out for me; I just errerd on teh side of cauation. IIRC it's 8 - 12% x benefit earned.

 

 

https://www.hl.co.uk/news/articles/archive/reasons-to-pay-into-a-pension-even-after-you-retire

That's great, thanks Frank.  Way off for me, just trying to help my mum get her finances in order.  Will open a SIPP for her and get her to put as much in as she can over the next 3 years until she officially retires.

Link to comment
Share on other sites

Archived

This topic is now archived and is closed to further replies.

  • Recently Browsing   0 members

    No registered users viewing this page.

×
×
  • Create New...