sipp vs ss isa

catoutthebag

I keep seeing sipp on these fora.
I read about them years ago. My memory has faded out though.
What are they in laymen terms? I've a ss isa and wonder if these are better or worse than sipp? Should I get into sipp ship too? I gave a private pension too

)

webnibbler

SIPPs are self invested personal pensions. They are generally considered suitable for more sophisticated investor who want more investment options and are happy making their own investing decisions. They are available through most fund platforms and are generally more expensive than employer's pension schemes.

If you are working it's probably best to contribute to the pension provided by your employer first before you consider a SIPP. This is particularly true if your employer runs a salary sacrifice scheme.

Hope this helps.

Linton

A Self Invested Personal Pension looks very much like an S&S ISA but is taxed, funded and pays out according to Pension rules. So looking at it from the other way, its similar to a private pension with the ability to investing in any unit trust, quoted share and much else besides.

SIPPs support the full range of pension freedoms which many private pensions dont.

Whether you should have one in addition to or instead of your private pension depends on whether you want the greater flexibility

MrBeans

The trouble with SIPPs is they are so darned complicated. If you have a good occupational pension and a SIPP you risk exceeding the Life Time Allowance and getting a big tax charge. Unless they change the rules. Which they keep doing. And it depends on your tax rate when working vs when retired just how good a SIPP will be.

Whereas with an ISA you can put up to £15240 in each year, you can have as much in ISAs as you like and when you retire the income from the ISA is tax free. Simple.

If you have an employer pension which they chip in to, max out what you can put into that, then I'd say put the max into an ISA and then if you have money going spare do all the sums to see if a SIPP might also be a good idea. Then do all the sums again if they change the SIPP rules in the March budget...

Mirno

A pension isn't taxed as you put money in, but may be as you draw it out (at retirement) (where "may" is defined by tax rules at the time).

ISAs are taxed before the money goes in (you've paid income tax etc.), but once in there it's protected, from both income and capital gains tax.

As others have said, your company pension is a better bet for most people than other options. The company provided benefits usually make it more than worth while!
I am considering opening a SIPP to collect prior company pensions in, but I will definitely be carrying on with my current company pension also.

webnibbler

Mirno wrote: »

I am considering opening a SIPP to collect prior company pensions in, but I will definitely be carrying on with my current company pension also.

This was also my reason for opening a SIPP - collecting about four old company DC pensions into it. I also wanted access to index trackers like the Vanguard range which as far as I'm aware aren't available in other personal pension.

catoutthebag

Thank you for your insightful posts.
I'm self employed and a personal pension holder. I'm 32 with 20k in the honey pot.
I'll probably stick with this.

webnibbler

catoutthebag wrote: »

Thank you for your insightful posts.
I'm self employed and a personal pension holder. I'm 32 with 20k in the honey pot.
I'll probably stick with this.

Always worth checking you're getting a good deal as far as fees go on your personal pension. Times change and generally pension provider fees have become more competitive. Stakeholder plans seemed cheap at 1% when they were launched years ago but now 1% could be considered expensive.

[Deleted User]

webnibbler wrote: »

This was also my reason for opening a SIPP - collecting about four old company DC pensions into it. I also wanted access to index trackers like the Vanguard range which as far as I'm aware aren't available in other personal pension.

Yeah we did similar, copy of a post I did a few weeks ago, cheers

The wife has a SIPP which is used as a bucket for lump sums from various sources e.g. FIT & RHI payments, interest/rewards harvested from many current accounts, old group personal pensions etc Also do a regular net £100pm. Say £6k a year being paid in.

The beauty of a SIPP it is very simple/flexible to operate on-line. I suppose we could do something similar with a regular personal pension but that generally means endless phone calls to organise payments and less choice of what to do with the funds with hopeless on-line access.

Like you my wife can't add to existing DB schemes so this setup works well and is amazing just how fast is is growing plus all that tax relief seriously adds up

Costs are similar to personal pensions however costs in our case are met by free money from the banks At least that's what I tell myself...

PS Although just using the Vanguard funds it's showing very strong performance so far

Cheers

catoutthebag

webnibbler wrote: »

Always worth checking you're getting a good deal as far as fees go on your personal pension. Times change and generally pension provider fees have become more competitive. Stakeholder plans seemed cheap at 1% when they were launched years ago but now 1% could be considered expensive.

I guess fees are one thing, but knowing what you're doing is another.