paying into SIPP to get rid of savings?

recessionhater

I am self-employed and facing repeated reductions in my earnings, and could find myself unemployed next year. I understand the self-employed can get the income-based JSA. But I do have stockmarket investments in a stock and shares ISA, in the low 5 figures, that mean I couldn't get the JSA, even if I had no income. Rather than run the whole lot down below £6K in order to get the JSA - if it comes to it - I would rather pay the whole amount into my SIPP and thus guarantee my longer-term future, and then apply for the JSA, as someone with no savings.

Are there rules that prevent you from doing that? Does there have to be a sufficient gap between paying into your SIPP and then claiming you have no savings when applying for JSA?

I am 42 and have never been on benefits before, but I am facing an extreme financial situation.

What about other debts? Eg tax debts, credit card debts, utility debts, mortgage arrears, council tax arrears and overdrafts: if you have struggled not to divest your investments, because a large increase in the value of the company invested in was likely in the near future, and have seen debts spiral - is it OK, legally, to pay what you made on the stockmarket into your SIPP, and then point out to creditors you have no funds with which to pay their debts? Or do you have to be able to show that when you transferred money into your SIPP, you still thought you had a reasonable likelihood of being able to service outstanding debts, and so were not deliberately getting rid of money that could have been used to repay debt?

Finally, can you pay your savings into your SiPP, and then seeing that you have debts outstanding proceed to file for bankruptcy? Could you be denied bankrupt status because you shouldn't have chosen to fund your SIPP over paying debts?

I am not there yet, and may just manage to sneak through unharmed, but I am now thinking of the worst-case scenarios. If I thought it might come to a worst-case scenario, would I be best off paying as much into my SIPP now before arrears on other debts mounted to avoid the situation I outlined above? Thanks for any expertise.

Finally, may I ask, does the £245,000 limit for annual funding of a SIPP allow any amount below that limit to be paid in, or is it only "an amount equivalent to your annual income, not exceeding £245K", in which case, as my income has fallen very low, I might not be able to pay much in in one go...

recessionhater

I have now found out you can only pay into your SIPP equivalent to your annual income, which makes it impossible for me to bang all my savings into my SIPP at once...

zagfles

recessionhater wrote: »

I have now found out you can only pay into your SIPP equivalent to your annual income, which makes it impossible for me to bang all my savings into my SIPP at once...

Or £3600 (gross) if your income is below that.

About your other question, there are rules concerning deprivation of capital in order to claim means tested benefits, so you need to be careful. Google "deprivation of capital" or ask on the benefits board.

recessionhater

thanks zagfles