Taking advantage of 20% tax relief and pensions for working pensioners

[tazdevil]

Say you're over retirement age and have pension pots that are just sitting there and aren't required for income. Could one take the 20% tax free and put it back into a new pension pot attracting the 20% tax relief adding to it. Wait a while and do the same. Would this be a good way to improve wealth growth or am I missing something?

[Jessica@WhiteFieldTax]

It is to good to be true

Government slam brakes on 'pension recycling' in Autumn Statement | This is Money

Also https://www.gov.uk/tax-on-your-priva...nual-allowance

[ASB]

Yes you can with limits. But there are many recycling rules which will restrict relief in many cases.

It depends on many things. An intro here.

https://adviser.royallondon.com/tech...tax-free-cash/

[VillageContractor]

Out of curiosity what benefit would you get by doing so?

[ASB]

Out of curiosity what benefit would you get by doing so?

Tax relief on the same money more than once.

E.g. pay 8000 into pension. 2k tax relief added. 10k in it. Take 2.5 lump sum. 7.5k in it. Put the 2.5k back in, 625 tax relief added. The extra 625 added magis it up to 10625.

Once a pension has had cash paid then you get restricted to 4k contributions.

It is something i need to be careful of in my situation. I receive half salary through a employer phi policy and very nearly 4k in pension contributions in addition (both corporate and personal).

I also have a pension which i will take when i am 60. Mainly due to various conditions and a high guarented annuity rate.

Whilst it is not recycling in the same money I need to be careful to make sure i dont lose relief on the contributions still being made going forwards.

[Lance]

It is to good to be true

too

[tazdevil]

It is to good to be true

Government slam brakes on 'pension recycling' in Autumn Statement | This is Money

Also https://www.gov.uk/tax-on-your-priva...nual-allowance

I know that if you take any money from a pension that's taxable your allowance goes from £40K to £4K but I'm thinking of only recycling the 20% tax free. Once its out I can do whatever with it including using it in lieu of income and putting the income into a new pension.

[MarillionFan]

Obviously one of the things to do just before retirement of course is to ensure you've maxed out your pension contributions for the tax year and back dated it for maximum tax relief. under carry forward rules.

https://www.adviserzone.com/adviser/...ancecalculator

So just before you go for it, pay in £160k, which should only cost you £128k + 32K at basic tax relief taking a last minute bonus.