Holding a SIPP

Hawkey99 · Post by **Hawkey99** » 24 Feb 2018, 20:10

If you are still working for RM and have done for 30 years and haven't drawn any of your pension yet are you able to open a SIPP as well.

If so is there anything special to consider. It just seems to easy to get 25% off the government for nothing ??

Any thought ??

Post by **RobertT** » 25 Feb 2018, 07:32

You can have and pay into as many pensions as you want as long as you stick to the rules about overall contributions. More info.

You can even pay into a pension if you have no earnings at all. See the same link as above for details.

With all the various NRA’s attached to the current RM pensions and the prospect of not being able to touch the CDC pension before 67, unless you want to take a reduction, personally I think it’s sensible to have a DC pot tucked away to either fund early retirement or to supplement your RM pension before the state pension kicks in.
So my advice would be to fill your boots, and get as much off the taxman as you can, it might not be available forever.

Hawkey99 · Post by **Hawkey99** » 25 Feb 2018, 10:06

Thank you very much Robert.

Hawkey99 · Post by **Hawkey99** » 10 Mar 2018, 20:26

I believe it is possible to take my NRA 60 pension but leave my NRA 65 and continue to pay into the new pension scheme and my AVC.

My questions are:

If I take my NRA 60 but leave my NRA 65 would I be able pay the same amount into my DBCBS as if I hadn't take any pension.

Can I still continue to make the same amount of payments into my AVC as before I took my NRA 60 pension.

As I have a significant amount in my AVC will the amount of tax I ultimately pay be effected by me taking my NRA 60 at 55. i.e. When I take my NRA 65 and DBCBS pension is the 25% tax free including my NRA60, 65, DBCBS and AVC or just the NRA 65, DBCBS AND AVC.

If I take my NRA 60 can I continue to make payments from my RM wage into my SIPP or is there something in law preventing this.

Many thanks for any help.

Post by **RobertT** » 11 Mar 2018, 09:30

Hawkey99 wrote:I believe it is possible to take my NRA 60 pension but leave my NRA 65 and continue to pay into the new pension scheme and my AVC.

My questions are:

If I take my NRA 60 but leave my NRA 65 would I be able pay the same amount into my DBCBS as if I hadn't take any pension.

The amount you pay into your DBCBS will be 6% of your pensionable pay with another 13.6% from RM. The fact you’ve taken your NRA60 doesn’t come into it.

Can I still continue to make the same amount of payments into my AVC as before I took my NRA 60 pension.

Yes, as long as you’re still employed by RM you can continue to pay into AVC’s. But if you reduce your hours, you may also have to reduce your AVC payments depending on the amounts involved.

As I have a significant amount in my AVC will the amount of tax I ultimately pay be effected by me taking my NRA 60 at 55. i.e. When I take my NRA 65 and DBCBS pension is the 25% tax free including my NRA60, 65, DBCBS and AVC or just the NRA 65, DBCBS AND AVC.

I stand to be corrected, but the way I understand it, is when taking your NRA60 all of your ‘pot’ including NRA65, AVC’s and the DBCBS will be used to work out the total value. Anything you take over 25% will either be treated as taxable income if taken as cash, or you can transfer it to another pension arrangement for drawdown or annuity purchase and possibly avoid tax.

When you take your NRA65, what’s left in your ‘pot’ will be used to work out the total value at that time, which would be NRA65, DBCBS + any remaining AVC’s.

So you could take your Flexiplan with your NRA60 and your Bonusplan and DBCBS with your NRA65, for example. but if you're still working for RM, you can still carry on paying into both of those accounts.

If I take my NRA 60 can I continue to make payments from my RM wage into my SIPP or is there something in law preventing this.

You will have to be careful not to be seen to be putting your NRA60 payments into your SIPP, because that might be construed as recycling. But generally speaking as long as you stick to the rules, which you already know about from another thread, I don’t really see a problem.

Hawkey99 · Post by **Hawkey99** » 11 Mar 2018, 10:08

Hi Robert,

Thank you for you reply as always. Why on earth are you not working in finance...LOL

You said

"I stand to be corrected, but the way I understand it, is when taking your NRA60 all of your ‘pot’ including NRA65, AVC’s and the DBCBS will be used to work out the total value. Anything you take over 25% will either be treated as taxable income if taken as cash, or you can transfer it to another pension arrangement for drawdown or annuity purchase and possibly avoid tax.
When you take your NRA65, what’s left in your ‘pot’ will be used to work out the total value at that time, which would be NRA65, DBCBS + any remaining AVC’s.
So you could take your Flexiplan with your NRA60 and your Bonusplan and DBCBS with your NRA65, for example. but if you're still working for RM, you can still carry on paying into both of those accounts."

So leading on to another question.

I only want to take my NRA 60 pension at this stage with no lump sum or AVC. Having done 30 years this is the lions share of my pension. If I do this i am concerned about paying tax when I take the remainder of my pensions (NRA65, CBCBS and AVC) as the total value of my combined remaining pensions will mean my AVC value will be over 25% of the total pot.

Is the NRA 60 not considered at all when you take your remaining pensions. If so surely you lose quite a bit of your 25% total tax free allowance. How can you avoid this.

So I guess Im saying, currently I can take 25% of my overall pensions (NRA 60,65, AVC) as tax free but don't want any tax free cash. However when I take my NRA 60 how is this counted in the overall 25% tax free process.

I have read this 4 times and my question is so badly put but I can't think of any other way to explain it.

Many thanks

Post by **RobertT** » 11 Mar 2018, 10:51

Having read through the important bits of the ‘guide to AVC’s on the pensions website, all it says is:

When you take your pension benefits you can use your AVC account to take a tax-free cash lump sum (up to a total cash lump sum of 25% of the total value of your main Royal Mail Pension Plan benefits and AVC plan benefits combined).

There is no info on what happens when you take the NRA60 and NRA65 separately. So I might have just answered why I’m not working in finance! Lol

If my first answer is correct, then the only way to avoid paying too much tax would be to take some or all of your AVC’s with your NRA60. It is the biggest chunk, so you’ll get a bigger tax free amount.

If my answer is wrong, then all of your overall pot will be considered at the time of taking both your NRA60 and NRA65. And if you’ve already taken your NRA60 then I assume the usual 20x multiple(or similar) would be used to calculate that benefit.

I suggest you email the pensions dept. to get an answer from them, and please post it here.

Hawkey99 · Post by **Hawkey99** » 11 Mar 2018, 18:06

Hi Robert,

I have sent the following question.

I am a section C member. I intend to take my NRA 60 as a pension shortly with no lump sum. In these circumstances can you please help with the following questions:

If I take my NRA 60 but leave my NRA 65 am I able to pay the same amount into my DBCBS as if I hadn't take any pension.

Can I make the same payments into my AVC as I currently do even though I have taken my NRA 60 pension.

Once I have taken my NRA 60, when I decide to take my other pensions (NRA 65, DBCBS and AVC) how is the 25% tax free cash amount worked out. Is it worked out on my NRA 60, NRA 65, DBCBS and AVC all added together or is it worked out on just my NRA 65, DBCBS and AVC only.

Good job pensions aren't complicated. I would suggest this is very important as it could effect quite a few of us........