SIPP - Use of lump sum benefits.

dunstonh

You can but a SIPP would be a strange product to use for this. An Immediate Vesting Personal Pension (IVPPP) would be the typical product in this area.

jamesd

How common are immediate vesting personal pensions that allow drawdown rather than annuity purchase? It happens that the only one I'm aware of uses an annuity only, so if that's the norm it could be a reason to favour a SIPP product that does allow drawdown.

Talking about immediate vesting with annuities, are there any worthwhile products that you know of that offer enhanced or ill health income improvements at the 3600 gross contribution level? Doesn't really sound like profitable business.

gbogest

dunstonh wrote: »

You can but a SIPP would be a strange product to use for this. An Immediate Vesting Personal Pension (IVPPP) would be the typical product in this area.

But I do not wish to take an income and want to leave the fund invested, so I'm not sure an IVPPP would be suitable would it?

dunstonh

Right, you didnt mention anything about not taking the income. You just said take benefits.

In which case a SIPP is fine although there are some personal pensions that would do it as well. It does seem a little pointless though taking the 25% each year if you dont actually need it. You reduce the tax efficiency of the death benefits and reduce the potential tax free lump sum later on.

Talking about immediate vesting with annuities, are there any worthwhile products that you know of that offer enhanced or ill health income improvements at the 3600 gross contribution level? Doesn't really sound like profitable business.

Not looked so dont know but a guess would be not many. £3600 just isnt enough to be profitable on enhanced/impaired schemes.

gbogest

dunstonh wrote: »

Right, you didnt mention anything about not taking the income. You just said take benefits.

In which case a SIPP is fine although there are some personal pensions that would do it as well. It does seem a little pointless though taking the 25% each year if you dont actually need it. You reduce the tax efficiency of the death benefits and reduce the potential tax free lump sum later on.

Hi
Thanks again. Sorry I wasnt clear when I said benefits. My reasoning for taking the 25% is that for a net outlay of £3500 I am creating an invested pot of £7500. I was going effectively add the 25% to the amount that have spare and am going to invest. But I take your point that it will reduce a future lump sum on an increased (hopefully) fund. I will have a think about it.
Geoff

jamesd

Your reasoning for doing that is fine. You can recycle up to £15,000 a year of the 25% money into fresh pension contributions without triggering HMRC anti-recycling rules.