My brovver

srcandas

He's 62 in April. Hasn't earned anything in the last 12 years - been a helper to my mum up to her death 18 months ago. He won't work again. Total loner so just himself to worry about.

He was burnt by the Bolton promotion but now at least has recovered some of the loss :mad:

Want to suggest he gets a SIPP as:

He will get 20% extra on the way in.
He is likely to get it out tax free - gap between allowance and state pension.
He invests his dosh in funds and shares anyway so no risk issues.

I'm suggesting a £2880 input over 4 years (£14400)
Assuming 5% gain year on year - £11340 pot + 25% tax free £3780
If he does it outside SIPP the pot would be £12096.

Of course the SIPP/drawdown will attract some costs.

Questions:

Can he put more into a SIPP claiming previous unused years of the £3600 allowance for non earners?
He has up to £50000 in other monies so losing access means little as he needs to live off income - in which case does such a small SIPP strategy make sense?

Any help before I break the golden rule of making suggestions to family much appreciated :beer:

Stochasticity

srcandas wrote: »

Questions:

Can he put more into a SIPP claiming previous unused years of the £3600 allowance for non earners?

No.

He has up to £50000 in other monies so losing access means little as he needs to live off income - in which case does such a small SIPP strategy make sense?

Yes, from a tax perspective, although four years is a relatively short investment horizon, he will almost certainly have difficulty making it cost effective to use drawdown, and he may also fall foul of the provider's minimum annuity purchase requirements.

Even if so, trivial commutation would remain a (slightly less tax effective and short-term, one-off) option.

Of course, besides available liquidity, there's nothing to stop him contributing £3,600 per annum all the way up to age 75 and then drawing benefits from what'd be a significantly larger pension pot.

srcandas

Stochasticity tx for that. I can see the drawdown cost will be an issue (as in 4 years or more time it could have substantially changed). And your confirmation that he cannot back claim and the £3600 limit is a limiting factor.

Of course as he has other monies the four years as an investment window prior to 25% grab could be extended. If we look at 8 years we are looking hopefully at a £30000+ pot.

And whether in or out of a SIPP the money will be invested so the investment window is not really a factor.

His only other pension he is drawing now is a very very small civil service one so I guess I need to explore triviality to see if that is an option. Now where's that search button?

:beer:

Jack_Griffin

Hope you know about this.

http://www.hmrc.gov.uk/ni/intro/credits.htm#4

If you've been claiming benefits or caring for a sick or disabled person

You can also get National Insurance credits for any weeks when you've been claiming benefits such as:

• Carer's Allowance
• Incapacity Benefit or Employment and Support Allowance
• Jobseeker's Allowance

If you are caring for a sick or disabled person you can get National Insurance credits for any weeks when you've cared for them for 20 hours a week or more. The person you care for must be getting the Disability Living Allowance care component at the middle or highest rate, Attendance Allowance or Constant Attendance Allowance, or qualify for a Care Certificate. Find out more by following the links below.

srcandas

Jack_Griffin wrote: »

Hope you know about this.

http://www.hmrc.gov.uk/ni/intro/credits.htm#4

Jack many thanks but yes he got that sorted and will receive full state pension. :beer: