Cheapest Sipp: build yourself a low cost DIY pension article

harryhound

petejones76 wrote: »

I work in the pensions industry and wanted to add a couple of comments:

Re the ISA v pension debate, I havent seen anyone mention the important fact that when you die an ISA falls inside your estate for IHT purposes and a pension outside. Threfore assuming your estate has IHT to pay you'll be increasing the tax bill hugely using an ISA for pension planning.

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Isn't the reality for most of us, especially the blokes, that our wives will expect to get the pension pot, if we pop our clogs before the age of 75. She will probably live another 15 years and need to spend it. Similarly she would inherit the ISA's tax free too.
I cannot see it being very popular to have a word with the trustees and leave the tax free pension pot as an educational trust for the grandchildren (say). Would this even be legal?

stphnstevey

If my salary is £5720, can I make a pyment of £5720 to a personal pension and the goverment will add tax reelief or is it £4461 and the goverment makes it upto £5720 with tax relief?

Paul_Herring

stphnstevey wrote: »

If my salary is £5720, can I make a pyment of £5720 to a personal pension and the goverment will add tax reelief or is it £4461 and the goverment makes it upto £5720 with tax relief?

http://forums.moneysavingexpert.com/showthread.html?p=25731055#post25731055

EdInvestor

petejones76 wrote: »

The point is that the pension pot is paid directly to next of kin on death.

AFAIK it is paid to the deceased's nominated beneficiary (at the discretion of the trustees) outside the estate.

It becomes her money in the same way that the ISA becomes her money on death of the husband.

Surely not in that the ISA money goes into the estate and is subject to the will (if any)?

dacks

Hi
For the last 15 yrs I have been paying into a personal pension policy the sum of 200 pounds per quarter
The tax relief made the paymenats 250 pounds a quarter, a thousand pounds annually
Next Feb when im 65 I wish to draw all the money. The provider CIS has told me I can receive 25% tax free but
must pay tax on the remaining 75%. Is this correct? Is there anyway of getting round this ?
Thanks, dacks

purch

No.

The Income you draw from the remaining 75% of the pot (or more if you choose not to take some or all of the Tax Free Lump Sum) will be taxable Income.

harryhound

dacks wrote: »

Hi
For the last 15 yrs I have been paying into a personal pension policy the sum of 200 pounds per quarter
The tax relief made the paymenats 250 pounds a quarter, a thousand pounds annually
Next Feb when im 65 I wish to draw all the money. The provider CIS has told me I can receive 25% tax free but
must pay tax on the remaining 75%. Is this correct? Is there anyway of getting round this ?
Thanks, dacks

You were getting the tax relief as an incentive to save towards your old age.

Why do you want/need to get at all the cash now?

stormyrider

Anyone have any experience of A J Bell with their Sippdeal product. I'm looking for a low cost Sipp product where I can primarily purchase shares (and secondly funds) and will be transferring in 4 plans.

From my first look in the market, looks like there are 3 providers that would fit my needs:

TDW - £12.50 a trade (£9.95 >6 trades per Q), 0.5% admin charge (£200 max), £80 in per plan
Sippdeal - £9.95 a trade (from 1st Dec), 0 admin charge, £50 per plan
Hargreaves L: £9.95 - £29.95 a trade, 0.5%+VAT admin (£200+VAT max)

From this looks like Sippdeal comes out tops - will cost me £200 to transfer the plans in and then just trading costs from there on in.

Any others I've missed, or is Sippdeal the best of the bunch for a low-cost execution only Sipp?

EdInvestor

I'm a happy Sippdeal customer, excellent admin and cheaper charges now they have taken their broking inhouse.

HL is better if you mainly want to make regular investments into funds as they provide this free of transaction charges. But for shares/ETFs/ITs, Sippdeal is the cheapest.

stormyrider

Thanks EdInvestor. I'm working under the assumption that this is the order of events that need to occur for me to transfer my pensions into Sippdeal:

1. Open a Sipp with Sippdeal with £0 investment initially.
2. Instruct current pension trustees to sell my fund holdings within my pension accounts. (The funds they are invested in aren't listed by Sippdeal as they are mainly institutional versions of retail funds so I guess that's my only option).
3. Once liquidated then fill in Sippdeal transfer forms and send them back.

Anything I've missed?

I've got my eye on a share that I currently hold as a direct holding outside of pensions that I am so keen to fill up on my SIPP!