SIPPing a pension fund?

reheat

Thanks for all your help so far. Trouble is more questions keep springing to mind ...

1. Once a pension is crystallised, if I went for the option of 0% income, what am I then actually allowed (and not allowed) to do with the remaining fund? Can it still be invested for decent returns as before? Can I still pay into the same fund if I wish to, or does being crystallised mean nothing more can be paid into it? (I think TH's original response implicitly answers this one for me, but I'd like to be sure).

2. This financial revamp is being driven by the possibility of redundancy very soon. I know there is a £35K tax-free limit on the redundancy lump sum, which I would be below. Do you know if this £35K tax free limit is confined to my redundancy payout? Because if I get the redundancy payout, and take the lump sum from the pension, those two combined would then well exceed £35K - would I then be liable to tax on the difference? Or are these tax exemptions (redundancy and pension lump sums) totally segregated?

EdInvestor

reheat wrote: »

1. Once a pension is crystallised, if I went for the option of 0% income, what am I then actually allowed (and not allowed) to do with the remaining fund?

You can invest it in the same way as you do now (and if in a SIPP in many extra ways not available in ordinary pensions, if you like)

Can it still be invested for decent returns as before?

Yes

Can I still pay into the same fund if I wish to, or does being crystallised mean nothing more can be paid into it?

In a SIPP you can, though the "before and after" monies are usually segregated (you can't take 25% tax free cash twice ; ) .Some people like to open a separate SIPP for new money..

Or are these tax exemptions (redundancy and pension lump sums) totally segregated?

Yes, separate issues.

dunstonh

Where Ed has written SIPP in the above post you can read that to mean SIPP & Personal pensions as the same applies to both.

EdInvestor

dunstonh wrote: »

Where Ed has written SIPP in the above post you can read that to mean SIPP & Personal pensions as the same applies to both.

No it doesn't. SIPPs can invest in shares, gilts, corporate bonds, investment trusts exchange traded funds, commercial property, TEPS, unit trusts, OEICS, hedge funds, cash and a number of more obscure assets.

Personal pensions can only invest in funds.

dunstonh

No it doesn't. SIPPs can invest in shares, gilts, corporate bonds, investment trusts exchange traded funds, commercial property, TEPS, unit trusts, OEICS, hedge funds, cash and a number of more obscure assets.

Personal pensions can only invest in funds.

There are personal pensions that can do that as well. Not many but they exist.

However, as over 90% of people investing into SIPPs still use funds, there is no need to jump to SIPP automatically each time. Nothing the OP has said suggests that a SIPP or Personal Pension should be used. Either could apply at this stage.

reheat

Thankyou good people . I think I'm slowly getting the hang of it!

reheat

I know you've been through much of this before with me, but I'm still struggling here .

Lets say I have a chrystallised SIPP with £60K in it after taking my 25% lump sum. If I then want to take 0% income from it at this time, does this mean Income Drawdown is my only option?

Assuming the above, are there good managed funds I could then still invest my (now chrystallised) £60K into, offering similar returns as if the pension had not been chrystallised? Any examples of suitable SIPP / fund combinations would be ever so helpful.

What I'm really trying to find out is this: I need to get my £20K tax free now, but do not want to draw the pension now. Ideally I want the money that is left in the pension to be managed for me in similar fashion as if I'd not yet activated the pension. Without exhorbitant and/or hidden costs of course.

Sorry if I'm being a bit thick about this, but it's doing my head in. I need the £20K; don't want the pension yet; do want the remainder managed for me if possible. Feasible?

(Finance is not my strong point!).

Thanks.

dunstonh

Lets say I have a chrystallised SIPP with £60K in it after taking my 25% lump sum. If I then want to take 0% income from it at this time, does this mean Income Drawdown is my only option?

Income drawdown is the only way to achieve that (in either a SIPP, personal pension or drawdown plan).

Assuming the above, are there good managed funds I could then still invest my (now chrystallised) £60K into, offering similar returns as if the pension had not been chrystallised? Any examples of suitable SIPP / fund combinations would be ever so helpful.

Exactly the same investment options exist whether you are crystallised or not.

reheat

If I take income drawdown at age 55, would I be able to convert it to an annuity at age 65, or am I stuck with it till an ASP at 75?

Do the investment funds have to be special ones to ensure tax exemption, or can it be any fund and it's just exempt bcause it's tied to a SIPP?

dunstonh

You can do annuity purchase whenever you like after (up to 75).