Paying £2880 into pension when retired

dunstonh

I'm slightly puzzled as to why you say that a SIPP would be pointless whilst they only offer their own funds.

The most logical product they should issue is a stakeholder pension. Stakeholders only offer internal funds. Personal pensions offer internal and some external. However, a SIPP is designed to offer access to more advanced assets and options from across the market. Typically anything listed on the LSE.

If a fund house is going to offer a SIPP and then handicap it so it only offers a half dozen funds, it seems rather pointless making it a SIPP in the first place.

I suspect that there might be a significant marketing advantage to calling your pension offering a SIPP rather than a PP.

For the lower knowledge end of the DIY market, you are probably right.

Are there rules dictating the minimum diversity you have to offer in order to call it a SIPP rather than a PP?

No. Just generic expectations.

pensionpawn

pensionpawn wrote: »

I've just spent an hour or so reading this thread with much interest. Mrs wife is presently around 2.5 years from getting hold of her personal pension(s) and so to make the sums easier let's assume by then that the personal allowance is £12k. She has a DC pension into which she currently dumps most of her salary via SS and a Sipp with HL she started (via a transfer from another pension) which has no regular contributions. Now the plan is, unless the experts on here spot a flaw in the cunning and deviousness, is to cut her hours dramatically to around the £3k6 pa that she can continue to completely dump into pension whilst simultaneously starting to draw from it. With no other income streams until SP, which is a long way away, I have reasoned that she can withdraw £16k pa tax free as £4k will be covered by the 25% tax free allowance and the remaining £12k is within the personal allowance. My only doubt is whether salary sacrificing affects my assumptions. Is it safe to assume that my logic is still sound even if the £3k6 annual pension contributions are not made via SS? Finally, when she decides that she wants to give up the part time work too, am I able to fund her £3k6 contributions from my pension withdrawals?

Oh, does anyone know if Chancellor mentioned if the £4k post drawdown limit will be indexed?

Dazed_and_confused

You've lost me with your maths

£3.6k salary
£12k (taxable) SIPP withdrawal

Even if the personal allowance was £12,000 that still leaves £3,600 on which tax will be payable?

Or maybe "£3k6" is just confusing me!

pensionpawn

Dazed_and_confused wrote: »

You've lost me with your maths

£3.6k salary
£12k (taxable) SIPP withdrawal

Even if the personal allowance was £12,000 that still leaves £3,600 on which tax will be payable?

Or maybe "£3k6" is just confusing me!

You can access your pension with the first 25% of every withdrawal tax free and the remaining 75% considered as taxable income. Therefore if you withdraw £16000, 25% would be £4000 tax free with the remaining 75% (£12000) liable for tax. If you have no other income then your income liable for tax is the same as the personal allowance and hence it attracts no tax. Therefore the full £16000 withdrawal is tax free each year. The £3600 is the net figure which when tax relief at 20% is added, will bring you up to the £4000 maximum permissible that you can pay into your pension after you have initially accessed it for drawdown. If the £3600 can be paid into your pension via salary sacrifice then you effectively have no income in the tax year besides what you drawdown out of your pension. If it doesn't break any rules, very efficient!

dunstonh

pensionpawn wrote: »

Oh, does anyone know if Chancellor mentioned if the £4k post drawdown limit will be indexed?

No. In fact, there were rumours it would fall again to £3600 to match the non-earner limit. That went quiet but would be a common sense move.

pensionpawn

dunstonh wrote: »

No. In fact, there were rumours it would fall again to £3600 to match the non-earner limit. That went quiet but would be a common sense move.

So effectively eroding this option within a decade..

dgordon

Hi,

I am past retirement age and still employed. Can I make use of the extra income I would receive from a state pension and pay it into my private pension (defined contribution). i.e by increasing my employee 5% contribution to say 15/20%.

Thanks

Linton

As long as your pension contributions in total are less than your earned income (from employment) you will be OK - SP is not earned income. It doesnt matter in this case where the money actually comes from.

Your other option is to defer your state pension which will increase it by 5.8% for each year you defer unless you reached SP age prior to April 2016 in which case the increase is 10.4%/year. The 10.4% is a great deal, the 5.8% more marginal.

gvlewis

Hi, wonder if anyone can help?

As I am a full time carer for my parents, I am not working so my earnings are consequently zero. From what I have heard/read it seems to make sense to put £2880 into a pension to benefit from the £720 a year tax free.

I have a number of generally small pensions including a PPP which I opened with Friend's Life [now run by Aviva] which dates back to the late 1980s. I also have stocks and shares ISAs and about £20k in Charles Stanley Direct.

I could add the £2880 into my PPP but would it make better sense to open a SIPP? As I already have an investment account with CSD, they seem to be the obvious first port of call - there is an account charge of £100+ VAT but this would probably be for the 1st year only. The CSD annual platform charge is 0.25%.

Any views on Charles Stanley Direct or are there other better providers?

Thanks.

P.S. I should add that my age is 57 and feel that it is highly unlikely that I will need the money in the next 10 years.

Joey_Soap

pip895 wrote: »

HL work out pretty cheep for a small pension pot - many others have an annual or quarterly charge and or charge for transactions. Unless you are going to end up with high tens or hundreds of thousands in there the 0.45% is not going to be a big issue.

But by exactly the same yard stick, Close Bros or Cavendish who both charge 0.25% will be almost half the cost of HL for doing exactly the same thing. Whose pocket is the 0.2% better being in, yours or HL's?