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SIPP a good idea ?

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Nationwide8
Nationwide8 Posts: 362 Forumite
Hung up my suit!
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
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Comments

  • dunstonh
    dunstonh Posts: 119,617 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    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.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • tacpot12
    tacpot12 Posts: 9,242 Forumite
    Ninth Anniversary 1,000 Posts Name Dropper
    Where are your savings held?
    The comments I post are my personal opinion. While I try to check everything is correct before posting, I can and do make mistakes, so always try to check official information sources before relying on my posts.
  • Nationwide8
    Nationwide8 Posts: 362 Forumite
    Hung up my suit!
    edited 14 August 2016 at 11:02PM
    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...
  • dunstonh wrote: »



    What happens if there is an emergency?

    It comes out of the £30,000 + that will be left
  • Sorry,didn't get many replies to my OP,anyone have any more thoughts or advice,Thanks.
  • As long as you're sure £30k will cover emergencies sounds like a decent plan
  • LHW99
    LHW99 Posts: 5,213 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    And the tax relief is effectively money for nothing as you are a non-taxpayer
  • xylophone
    xylophone Posts: 45,602 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    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
    DesG Posts: 1,291 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
  • Nationwide8
    Nationwide8 Posts: 362 Forumite
    Hung up my suit!
    edited 26 August 2016 at 2:18PM
    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 ?
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