SIPP a good idea ?

Nationwide8

I admit I know little about SIPPs but have read a little on here..

My circumstances...early retired at 55
Very modest Private pension which I live off.
£50,000 +in savings etc to offset emergencies until state pension kicks in,ie,New boiler,New TV,washer etc,etc

Am a non taxpayer ...

At the moment my state pension age is 67....so in theory I have 12 yrs to "get through" before extra income kicks in ( doubtful for various reasons that I would work again )

Reading on here you can invest in a SIPP ? £2880 per annum and gov tax relief will add £720 = £ 3660 actually into the fund. ( is that right )

So should I be looking at a SIPP with £2880 a year for maybe 6 yrs until age 61 and then draw on it for extra income until my state pension licks in at 67 ?? ( as it stands now )
Bearing in mind SIPP contributions would be coming out of emergency savings ?
Can you even contribute to a SIPP for only 6 yrs ?

Am also guessing fund charges would erode some of the "profit" of £720 per annum

dunstonh

Reading on here you can invest in a SIPP ? £2880 per annum and gov tax relief will add £720 = £ 3660 actually into the fund. ( is that right )

It is any pension (SIPP, PPP or SHP) and the maximum without earnings is £3600 p.a.

Bearing in mind SIPP contributions would be coming out of emergency savings ?

What happens if there is an emergency?

Can you even contribute to a SIPP for only 6 yrs ?

You can invest in a pension for less than 24 hours.

Am also guessing fund charges would erode some of the "profit" of £720 per annum

Charges on funds are not dissimilar to charges on savings accounts. The only difference is that one is implicitly charged and the other is explicitly charged.

The £720 is not profit. it is tax relief. The profit will be on the investments.

tacpot12

Where are your savings held?

Nationwide8

tacpot12 wrote: »

Where are your savings held?

At the moment various savings account,ISAs,Current Accounts,cannot loose any of the capital as zero chance of replacing it.Although Yes I know anything in cash is only worth so much in 5-10 yrs time...

Nationwide8

dunstonh wrote: »

What happens if there is an emergency?

It comes out of the £30,000 + that will be left

Nationwide8

Sorry,didn't get many replies to my OP,anyone have any more thoughts or advice,Thanks.

chockydavid1983

As long as you're sure £30k will cover emergencies sounds like a decent plan

LHW99

And the tax relief is effectively money for nothing as you are a non-taxpayer

xylophone

You could, for example. open a SIPP with Hargreaves Lansdown, contribute £2880 (which will be increased to £3600 after HL have claimed the tax relief), choose to keep in cash rather than invest ( regarding the TR as "interest", if you like), and do the same in subsequent years.

There is currently no platform charge if the money is kept in cash.

When you reach your preferred age, you mention 61, you could take the tax free lump sum and then draw down in the manner that best suits your circumstances.

DesG

previous thread on this subject:- https://forums.moneysavingexpert.com/discussion/5477605

Nationwide8

xylophone wrote: »

You could, for example. open a SIPP with Hargreaves Lansdown, contribute £2880 (which will be increased to £3600 after HL have claimed the tax relief), choose to keep in cash rather than invest ( regarding the TR as "interest", if you like), and do the same in subsequent years.

There is currently no platform charge if the money is kept in cash.

When you reach your preferred age, you mention 61, you could take the tax free lump sum and then draw down in the manner that best suits your circumstances.

Thank you for all replies..

xylophone,if I pay in for say 5-6 yrs £2880 and then start drawing on it at 60-61,I know I can draw out 25% tax free but if I draw a certain amount out monthly until SP age that even combined with my private pension would NOT taken me over my PA would I be taxed on it ?? Am assuming not ?