PhD Stipend and Pension Planning- SIPP or Uni Pension Scheme?

chris1511

Hi all,

I'm receiving a £16,000 (soon to be 19,000 with top up) a year stipend, tax free with no NI contributions paid out on a quarterly basis into a Santander postgrad 123. I currently have my accounts organised to pay into a Help to Buy ISA at £200 and £120 into a basic cash ISA per month. £145 a month goes on travel, with £800 transferred into a current account that I use as spending for the month (rent/food etc) with any leftovers accumulating in the account until sizeable enough to transfer to my cash ISA.

I have no pension at all at this point in time and i'm looking to get started. I'm looking to open a SIPP and re-arrange my budget to shove the £120 of the cash ISA into the SIPP at least until my stipend top up comes, then i'll rearrange to distribute it better between the SIPP and cash ISA with a minimum of £120 into the SIPP.

I do have the opportunity soon to work with the University i'm doing my PhD at, on an actual employment contract. It won't be much though (at least £700 a year-maybe less) but the pension plan the university has is rather fantastic with about 6% employer contribution. I may have the option to opt-in. Is it therefore ideal to defer the setting up of a SIPP, get on the university pension plan, and then load it with the cash id otherwise throw into the SIPP?

The stipend status rather complicates all this budget/pension planning advice in the most awkward of ways.

rpc

As a non taxpayer, you can pay in an annual maximum of £2880 net, on which you get tax relief to make it £3600 gross.

Why a SIPP? It is probably a very expensive way to invest at those contribution levels. Given you have no other investments, it also seems likely to be more complex than you need.

There is no reason you can't start a personal pension today and if you do get some work you can reassess at that point. Deferring pension contributions just in case something better comes along just means that you aren't paying into a pension when you could be.

You may also want to put some money into a stocks and shares ISA for long term growth outside a pension scheme.

The employer pension scheme will be the best option when it is available - it takes a lot to beat free money.