Can I have a SIPP and withdraw it all in cash in a few years?

phred

I an 61, retired and in receipt of a Local Govt. pension of about £30,000 p.a.


I am considering taking out a SIPP for £3,600 p.a., mainly for the tax attractions, as I believe I can get 20% relief on this.


Assuming reasonable returns (3-4%) on low risk investments and charges of say £100 p.a. am I now allowed to withdraw the full investment in cash when I am 65?


Can I even go on investing beyond 65 years of age?


I have admit that pensions rules confuse me a lot!!!

Triumph13

As noted on another thread, this is an awful lot of hassle for very little reward. The '£3,600 contribution without earned income' perk is only really valuable to those with no other income in retirement. Once you are already a taxpayer it becomes pretty pointless.

Yes you can get tax relief on £3,600, but 75% of it will be taxed when you take it back out again, so all you have really gained is the tax on the lump sum which comes out at £180. Most (all?) of that gets eaten by the charges leaving you with a tiny profit if you are lucky.

phred

Thanks Triumph for your reply.
I thought it was too good to be true.

mania112

I somewhat disagree.

While working the tax efficient hierachy of saving/investing is 1. Pension 2. ISA 3. Bond

Now you are retired it's 1. ISA 2. Pension 3. Bond

- So if you've filled your ISA, a Pension is a good idea. It is tax neutral - which is better than paying tax on the interest.

Triumph13

mania112 wrote: »

I somewhat disagree.

While working the tax efficient hierachy of saving/investing is 1. Pension 2. ISA 3. Bond

Now you are retired it's 1. ISA 2. Pension 3. Bond

- So if you've filled your ISA, a Pension is a good idea. It is tax neutral - which is better than paying tax on the interest.

Whilst I can see your point, I think in the OP's case the odds of him having more than £15k pa to add to his ISA from his £30k pension are probably fairly low...