HMRC has issued a pensions warning about when to seek financial support as it can’t advise on certain elements of a person’s situation.
The tax authority was contacted by a retired teacher over X who had a query about setting up a SIPP (self-invested personal pension).
They asked: “I’m a retired teacher who claims Teacher Pension. I also work part-time. I have used my ISA Allowance. Can I also set up a SIPP in this tax year?”
A member of the customer service team said in response: “Most SIPPS are not linked to ISAs unless it is a specific type.
“Unless the SIPP is linked, which the pension provider should tell you, there wouldn’t be an issue.”
The customer provided some more details about their situation. They said: “Just to explain more, I’m not claiming State Pension yet.
“However, if I were to stop my supply teaching, can I still open a SIPP and what is my investment limit per year?”
The tax body then asked if they would have any employment or taxable income. They responded: “There is a teacher pension and some savings. Currently got a cash ISA.
“I am happy to continue working part-time but interested to know if the SIPP is possible if I stopped working.”
HMRC then advised them that there is not a limit to how much a person can pay into a pension scheme but rather there is on the tax relief you can get on your pension savings.
The customer pressed on to try and clarify how the rules apply to them. They said: “Put simply, I think I need to remain in employment in order to invest significantly into a SIPP.
“Allowance being up to £60,000. Otherwise it’s reduced to £2,888 if I’m fully retired. Correct?”
HMRC replied: “Yes, you do need to have a taxable income in order to get tax relief on it above the £2,888.”
The individual had a further question about their situation. They asked: “I am a retired teacher receiving a teacher pension. I am also working as a supply teacher and paying into a work pension.
“Can I also open a SIPP or would it be better to pay into the work pension in terms of added funds. If I stop work, can I open a SIPP?”
The tax authority cautioned: “You would need to get advice from a financial adviser as to whether the work pension or SIPP is better for you, that’s not something we can advise on.
“Yes you can have both a SIPP as well as a work pension and pay into both.”
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