At almost 80....

margaretclare

Aged almost 80, I'm thinking of getting rid of my SIPP and merging most of it with my S&S ISA.

I already have SRP from my own NI contribution record and 3 other smallish annuities. One - Pru - pays out just over £100 per month. Another, Guardian, pays out £1483 every September. Aviva pays out approx £600-700 every July. Pru and Aviva are both guaranteed to increase by 3% annually. Guardian isn't, but since 1989 I've had far more out of it than ever went in. It came from my NHS pension.

I've had a smallish SIPP for about 10 years now. It's the only one I really pay any tax on. Up to this April I had to pay £90 every July to have it re-assessed and be told how much it would be worth if I converted it to an annuity. I also pay full basic rate tax on any withdrawals.

Now, the rules have all changed. This is about £6K, a tiddly amount really, which I can do what I like with. I have in mind to use some of it, approx £1K, for some expense this summer, and transfer the rest into my S&S ISA. It has been fun watching this grow, and it's there should I ever require an amount in savings. DH and I have enough in income between us. He's saving to pay off the car loan. I'm saving...well, because it's fun, and because I don't know what we may need in time to come. Oh, did I say? Both the SIPP and the S&S ISA are under the Hargreaves Lansdown umbrella. I was talking to them yesterday and I know they don't give advice. That's the point of 'self' invested - the decisions are down to me.

I had a CT scan and some investigations done earlier this year in the private sector, I bought some clothes for our forthcoming holiday, I'm still helping certain other descendants, and we have one final bit of building/renewal work to be done this summer. And our holiday in Bavaria. I like to pay off my credit card asap, so £1K will do the lot of that. The remaining £5K, add to the existing £17K which my S&S ISA, to my utter amazement, has grown to.

Nice people @ H-L warn me to 'make sure I have enough income'. Well, I have. I don't want to buy a fancy foreign sports car, but I do like the freedom these changes have given me.

kidmugsy

Are you considering buying a pension top-up? I suppose if you have enough income already there's not much point.

https://www.gov.uk/government/publications/additional-state-pension-top-up

dunstonh

I'm thinking of getting rid of my SIPP and merging most of it with my S&S ISA.

SIPPs and ISAs shares the same investment options and costs. So, you have to focus on the tax differences.

So, which gives the best tax position for your circumstances?

margaretclare

kidmugsy wrote: »

Are you considering buying a pension top-up? I suppose if you have enough income already there's not much point.

https://www.gov.uk/government/publications/additional-state-pension-top-up

No, I can't do that, kidmugsy - wrong age, much too late.

margaretclare

dunstonh wrote: »

SIPPs and ISAs shares the same investment options and costs. So, you have to focus on the tax differences.

So, which gives the best tax position for your circumstances?

I think the S&S ISA will be best from the tax point of view. Several thousands could possibly be paid in this tax year by me without disturbing the tax position. There's really no point in my keeping the SIPP and drawing-down annually then paying tax at BR on the amount drawn. Adding the residue of the SIPP to the ISA would make more sense and it would continue to grow.

dunstonh

I think the S&S ISA will be best from the tax point of view.

Although you will pay tax to get it out of the pension to put it into the ISA. It will form part of your estate (unlike the pension).

There's really no point in my keeping the SIPP and drawing-down annually then paying tax at BR on the amount drawn.

Death is probably the main thing and who inherits the pension and what they would do with it.

margaretclare

dunstonh wrote: »

Although you will pay tax to get it out of the pension to put it into the ISA. It will form part of your estate (unlike the pension).

Have just read elsewhere on this site that ISAs will not form part of estate!

Found the ref: http://www.moneysavingexpert.com/news/banking/2014/12/surviving-spouse-to-inherit-tax-benefits-of-deceased-partners-isa-autumn-statement-2014

Death is probably the main thing and who inherits the pension and what they would do with it.

That would be DH assuming he survives me. He wouldn't need it as income. If he doesn't survive me then again, no one else would want it.

bowlhead99

margaretclare wrote: »

Have just read elsewhere on this site that ISAs will not form part of estate!

You probably read wrong *edit: or it was explained wrong*

Savings accounts (whether tax wrapped 'individual savings accounts' or not) count as part of your estate. But giving something to your spouse is something that doesn't attract IHT which is maybe why they explained it that way.

That would be DH assuming he survives me.
He wouldn't need it as income. If he doesn't survive me then again, no one else would want it.

If the only beneficiary of your estate is going to be your husband then the size of your estate is probably a red herring as he won't be paying inheritance tax whatever he gets from you

If you put it in an ISA wrapper than he gets to inherit that size of an ISA wrapper from you, as well as the contents. However if you and he are not the kind of couple that max out their ISA limits every year then he may have plenty of space to wrap up the money in his own normal allowance anyway.

kidmugsy

margaretclare wrote: »

No, I can't do that, kidmugsy - wrong age, much too late.

Really? I put in some make-believe numbers for you into the official calculator and it seems to think you could do it.


https://www.gov.uk/state-pension-topup/y/1935-07-07/female/25.0

Still, there's great comfort to be had for having some free capital rather than extra income.

Teaandscones

At 80 my g grandmother refused to buy a new television on the grounds that she was saving for her old age. She wasn't that daft, her son paid for the tele and she lived another 20 years.

margaretclare

Teaandscones wrote: »

At 80 my g grandmother refused to buy a new television on the grounds that she was saving for her old age. She wasn't that daft, her son paid for the tele and she lived another 20 years.

Well done to your GGM. I feel a bit the same. I know - logically - that it's all coming to an end, but - illogically - it feels as if it could go on for ever. DH and I are not very mobile but we still have all our marbles. As long as we can still afford the car, can drive it without any disasters (as happened near here recently, lady in her 80s drove the wrong way along the A13 causing mayhem) and as long as we're together, we can still have a good life.

I've been saving since we both stopped work in 2002, mainly because I could, it was fun, and also, we've had practical instances of the value of having some savings as opposed to having none. When we needed the bathroom re-doing, just being able to get someone in and pay for it, that was a great feeling.

I also have another small project on which few know about. There are 2 little people that I haven't met, whom I may never meet, their Gran, my surviving daughter, doesn't want me 'worming my way into her family' as she kindly puts it. However, in conjunction with their Daddy, I'm putting money into junior ISAs for them both. The longer I can go on doing that, the better. Hopefully they'll get a nice surprise when they're old enough to appreciate it.

Bowlhead99 is correct. We're nowhere near IHT limits and whatever I do with my SIPP or S&S ISA will not make a lot of difference to DH. We don't max out the ISA limits - chance would be a fine thing. We're 'comfortable' but nowhere near rich.

It was just that it occurred to me - keeping the SIPP going is a bit pointless. I could put the money into the S&S ISA and it could grow all together in there.