The Lemon Fool

I 'retired' at the end of March and was 60 last week. I'd been paying 20% into my company's pension scheme (defined contribution - 'pension A'). In March 2017 I paid in an extra £20,000 (my cash ISA) into this pension in anticipation of retiring early.

This March I paid in an extra £10,000 to an older DC pension (pension B) and on 6 April I arranged to take the tax free lump sum and to draw a monthly sum to take me to 65 when a much older DB pension kicks in. I also put £2,880 into a new SIPP for 2017-18, with the intention of adding £2,880 a year for the next four or five years. These two payments were from my current account, but I have other savings (S&S ISA and premium bonds) that could cover it.

I have just received the TFLS from pension B (£14,000) and am about to do the paperwork for pension A (TFLS of £30,000-ish and smaller monthly drawdown). Drawdown from pensions A and B combined will equal my annual personal allowance (and there should be a fair bit of pension A left at 65).

I haven't yet made the £2,880 payment into my new SIPP for 2018-19, and when talking to a friend yesterday she said that this was pension recycling so now I'm worried ... is it?!?

ouzo wrote:I haven't yet made the £2,880 payment into my new SIPP for 2018-19, and when talking to a friend yesterday she said that this was pension recycling so now I'm worried ... is it?!?

No it's not recycling. I'll need to dig out a reference, but paying only the £2880 per year into a pension never breaches the recycling rules, no matter what your sources of income are.

Scott.

Hi Scott, thanks for reassuring me so quickly!

I have to say that without Lemon/Motley Fools I'd never have been able to retire at 60 ... when I joined (around 2000) I didn't have any savings to speak of - I'm so grateful for all the advice and encouragement here.

Cheers
Ann

Ouzo,

I agree with scott that adding £2,880 will never be considered as pension recycling.

See the Prudential Advisor link below for the nitty gritty of the rules. As a rule of thumb, if you recycle less that 30% of the tax free lump sum(s) received over 3 years then it is not classed as recycling. You would also need to exceed you 'normal' annual contribution to fall into the definition of recycling.

https://www.pruadviser.co.uk/knowledge-literature/knowledge-library/pension-recycling/?advsr=1&advtsr=2&q=pension-recycling#section-2