Pension Transfer

berbatov10

I would welcome your input. I have an occupational pension and also a small pot of maybe £9-10,000 held in a Friends provident account which I have never contributed too but which started many years ago. Should I start adding to this small pot? Should I tranfer it to somewhere like HL or Nutmeg? Or should I tranfers it starting a SIPP with HL Nutmeg or similar ? The reason for my last is that I am a higher rate tax payer and having looked at SIPP's I can see the tax advantages. I also have an amount of cash I could put into whatever scheme. Many thanks

dunstonh

Should I start adding to this small pot?

If its the right thing to do then yes. If not then no.

Should I tranfer it to somewhere like HL or Nutmeg?

Two very different services and also different to the Friends pension. What exactly are you looking to achieve as you have given three different options with a different investment style (and cost) but not said anything about which is likely to be most suitable for you.

The reason for my last is that I am a higher rate tax payer and having looked at SIPP's I can see the tax advantages.

A SIPP is a pension type but the higher rate relief applies equally to stakeholder pensions and personal pensions. SIPPs are generally geared for the experienced investor looking for assets to invest in which are not typically offered by a stakeholder or personal pension.

berbatov10

Duston that was a quick reply! My circumstances are I have Police pension which will start when I retire in 4 years or less? I have a couple of BTL properties which are mortgaged and some other investments with HL. My OH has no pension at all (old age when it kicks in) so I guess I am looking to maximise my tax relief by paying an AVC type pension contribution getting the best return (I know we all want that) which will benefit us both. Does that help?

kidmugsy

berbatov10 wrote: »

I guess I am looking to maximise my tax relief by paying an AVC type pension contribution getting the best return (I know we all want that) which will benefit us both.

In your shoes I'd contribute enough this tax year to avoid 40% tax, but no more. That 40% relief might vanish soon. If there's still 40% relief next tax year, do it again.

Once the 40% relief vanishes, to be replaced (presumably) by 30% or 33% relief, contribute instead to your OH's pension.


As for a provider, HL offer an excellent service, but are a bit pricey if your SIPP grows beyond (roughly) £30k. For a Personal Pension people here often recommend Cavendish O/L.

P.S. How old are each of you?

redux

Irrespective of the investment aims and performance, different platforms' scheme charges may point towards keeping schemes separate or merging them.

Charges are either flat rate for admin, or a percentage on the total holding, or both, and dealing charges (on shares, including investment trusts) can vary quite a bit, so holdings of certain sizes may be inefficient with certain providers.

berbatov10

Kidmugsy we are both 53.

xylophone

Remember that as a higher rate tax payer paying into a "Relief at Source" product, you will need to reclaim the additional tax relief either through your tax return or by contacting HMRC.

Don't forget that you are limited as to the amount that can be contributed to your pension each year that is eligible for tax relief.

See
https://www.gov.uk/tax-on-your-private-pension/pension-tax-relief

Does your wife have any earned income? If so, does her employer offer a pension scheme?

If she is self employed, has she thought of contributing to a pension?

Otherwise, you can contribute up to £2880 to a pension scheme for her and the provider will claim £720 tax relief.

Have you both seen https://www.gov.uk/new-state-pension/overview as you will draw SP under the new arrangement.

berbatov10

Thanks xylophone and all others. I have to do a tax return for my BTL property so thats not a problem. My OH does work she has just started at a new firm will have to get her to ask about their contributions to her pension

xylophone

Re your wife - see https://www.gov.uk/workplacepensions

kidmugsy

berbatov10 wrote: »

Kidmugsy we are both 53.

So you'll have flexible access to the money within a couple of years. But for you only the first 25% could be taken tax-efficiently, since you'd be exposed to 40% tax on the rest. That's why your contributing after (if!) the tax relief is reduced to 30%/33% is a poor idea, and why contributing for your wife would give you much more flexibility, assuming that she will be a 20% taxpayer.

berbatov10

Thank you Kidmugsy definatly food for thought.