SIPP for non-taxpayer

etienneg

I've read here about a SIPP for a non-taxpayer. If I understand correctly, someone with low earnings (only £100s pa) and receiving a small pension (less than £3,000 pa), aged 63, can contribute £2,880 to a SIPP which will get £720 added by HMRC. The £3,600 can then be withdrawn and the process repeated in the next tax year up to age 75. Is this correct? Who provides such a SIPP (cash only, no investments) and what sort of costs are there? Are there any pitfalls to avoid?

PeacefulWaters

Stakeholder with Virgin Money would be a good starting point.

etienneg

OK, thanks for the suggestion. I had a look at the Virgin Money web site. It didn't mention stakeholder - just personal pension. Is this the same thing? Also (perhaps not all that surprising) most of what it said was aimed at long-term saving, not just depositing to get the HMRC contribution and then withdrawing. The charge quoted was 1% annual. Would this mean £36 in total to do what I described each year?

xylophone

The HL SIPP may be of interest but to avoid the early closure fee you need not to close it in the first year.

It is possible to contribute, hold the money in cash, have tax relief added, go into drawdown etc.

They are very helpful on the phone.

PeacefulWaters

etienneg wrote: »

OK, thanks for the suggestion. I had a look at the Virgin Money web site. It didn't mention stakeholder - just personal pension. Is this the same thing?

Yes. And it does mention stakeholder.


http://uk.virginmoney.com/virgin/pension/popups/stakeholder-standards.jsp

Also (perhaps not all that surprising) most of what it said was aimed at long-term saving, not just depositing to get the HMRC contribution and then withdrawing. The charge quoted was 1% annual. Would this mean £36 in total to do what I described each year?

Correct. Subject to any fluctuation in value if you leave money invested.

zagfles

PeacefulWaters wrote: »

Yes. And it does mention stakeholder.


http://uk.virginmoney.com/virgin/pension/popups/stakeholder-standards.jsp

Correct. Subject to any fluctuation in value if you leave money invested.

But that's not cash by the looks of it? For what the OP wants to do an HL SIPP may be a better option, as he/she can keep it in cash and there no annual charge - just the "one year closure" charge to watch out for as mentioned by xylophone.

They do have a closure charge of £30 if you keep it more than a year but seems a small price to pay if it's open for 12 years. Also wonder what would happen if you drew down to £0.01 and just left it open?