What happens at age 75

[AJC5001]

A couple of recent posts have prompted me to check what happens when you reach age 75.

In viewtopic.php?p=576117#p576117 Kidman said "To compicate matters more I seem to remember there is some rule that if one doesn't take the tax-free cash before age 75 then it becomes taxable, at least in certain circumstances such as death."

and in viewtopic.php?p=580377#p580377 kempiejon said "However as a non-incomed under 75 year old one has an allowance. Those with no UK earnings at all can make contributions up to £3,600 a year including tax relief, so you would put in £2,880 and HM Revenue & Customs (HMRC) would add a further £720 directly into the SIPP."

My understanding is that tax relief is available for contributions prior to reaching age 75 and is not available when 75 or over. This applies to any contributions, including the £3,600 non-earned allowance.

https://www.gov.uk/government/publications/rates-and-allowances-pension-schemes/pension-schemes-rates says
"There’s no limit on the amount that an individual can contribute to a registered pension scheme. If you’re a UK resident aged under 75 you may receive tax relief on your contributions to registered pension schemes.

Tax relief is limited to relief on contributions up to the higher of:

100% of your UK taxable earnings
£3,600"

https://www.hl.co.uk/pensions/tax-relief says
"Are there any rules or limits on pension tax relief?
You must be under age 75 to get tax relief. There are also limits on how much tax relief you can receive and how much you can pay into a pension.

You’ll only get tax relief on personal pension contributions up to 100% of your UK earnings, or £3,600 if this is greater (if you’re a low or non-earner)."

I cannot find anything that says you must take the Pension Commencement Lump Sum before reaching age 75. If there was any such restriction it would make it difficult for those taking UFPLS which includes 25% tax free.

The only other 'age 75' effects I know of are:-

1. If the holder dies before reaching 75, the pension will pass to beneficiaries free of all tax. After 75, the beneficiaries recsiving pension assets will have to pay tax according to their own tax position.

2. There is a Benefit Crystallisation check against the Lifetime Allowance at age 75. This has tax implications for tax year 2022-23. The March Budget proposals will change the tax rates for excess over LTA to zero foe tax year 2023-24, with the removal of LTA schedules for tax year 2024-25. (A future government may change this, of course )

Do I have the above correct?
Are there any other age 75 consequences foe pensions I have omitted?

I find it annoying that the State Pension age and Minimum Pension age have been increased from 65/55 to 66/56 and will soon be 67/57 with 68/58 being considered but age 75 has not been increases in line.

Adrian

[UncleEbenezer]

If we're seeking to clarify confusion ...

My birthday is not April 6th. Therefore (if I survive to see it) there will be a financial year which I start at 74 and end at 75. Do I, for example, get to contribute £3600 with all the tax benefits that year? Or nothing? Or pro-rata according to where my birthday lies in the financial year? Or ???

[Dod101]

At age 75, I did not feel very different from I felt at say 70 so do not worry. Nothing much is likely to happen.

The main change as far as a SIPP is concerned is that there is no tax benefit to continuing to add to a SIPP; in fact there is a disadvantage to continuing contributions because if you want to extract any funds later on, you will pay income tax at your marginal rate. The main advantage is that it is still quite an efficient way of passing on funds after your death, usually free of IHT.

The other change at 75 is that upon your death, if you still have your SIPP, the beneficiaries will pay tax at their marginal rate on any withdrawals. If you are considerate enough to die before attaining that age, the beneficiary can withdraw money from it free of any taxes.

Dod