I am a non-earner. Is it even worth it for me to take out a SIPP?

kidmugsy

NotSkint wrote: »

Kidmugsy, you have partially quoted me and then said I am incorrect.
Sorry, but if you read my reply and go past the comma you will see that I have already said relevant earnings, which is true :)

Your ill-written remarks are confused rubbish. What the devil sort of English is 'a non tax payer can still contribute up to their yearly income and have tax relief added, even though they don't pay any tax. The income has to be "relevant earnings" '?

NotSkint

kidmugsy wrote: »

Your ill-written remarks are confused rubbish. What the devil sort of English is 'a non tax payer can still contribute up to their yearly income and have tax relief added, even though they don't pay any tax. The income has to be "relevant earnings" '?

Well that is harsh! Ouch!
the original OP understood what I was saying as per their response.
At the time was trying to tease more info out to try and help.
In the context of what I did say a Google of "relevant earnings" with respect to pension contributions would have given further information.

eightbo

Well I know nobody owes me anything on here but it seems the select few members of this site who chose to initially reply haven't returned, except to bicker. Ainsi va le monde... ♥

EdGasketTheSecond

Aretnap wrote: »

You still get tax relief (ie 25% added) even if you're not paying tax. That works out as £720 of free money each year (plus tax-free growth, as you'd get in an ISA or similar). Maybe £720 is not a huge amount in the grand scheme of things - but it's still better than not getting £720 of free money.

The trouble is that it's not free money is it? That is because when you come to withdraw it you get taxed on 75% of the withdrawal at your highest marginal tax rate. e.g. you pay in £2880; it gets topped up to £3600. You get back £900 tax free then get taxed on £2700 lets say at 20% so net you get £2160. So in total you pay in £2880 and get back £3060 so your 'free money' is actually only £180 and once fees and charges are deducted not even that. Hardly worth it considering your money is locked up for years and years.

mark1959

No, your free money is £720 minus whatever your pension provider charges, if you are 55 or over and don't pay tax.

EdGasketTheSecond

mark1959 wrote: »

No, your free money is £720 minus whatever your pension provider charges, if you are 55 or over and don't pay tax.

Well most people DO pay tax. State pension counts towards taxable earnings you know.

mark1959

I know. I also know if you're between 55 and 65 [male] you don't receive the state pension. And when you do, most state pensions will be circa 6-8K, considerably less than 11.5k starting rate of tax.

janesmith

To answer the original poster's question, IMHO I don't think it's worth it. All that paperwork and admin every year just to net a few quid.

There is a superior Return on Investment to spend that time getting the supposed £720 "free" money every year working and making a much higher sum of money.

Brynsam

eightbo wrote: »

I'd like to start investing a small % of my money each year. I was pointed to some content online (by Author & ex-Hedge fund manager Lars Kroijer) which suggests a combination of low-risk bonds and investing in global equity market index trackers makes for a simple but effective portfolio.

However, I have 2 concerns.
1) My income is not taxable, meaning I'm a non-earner who can only contribute £2,880/yr (£3,600) which is too low in terms of % versus my yearly income.
2) If I've understood pensions correctly, I won't be able to access the funds until I'm around 60 - Absolute nightmare. I'm all for compound returns but if I can't access them to help buy a property outright when I want to, what's the point?

Now, I can see it would be worthwhile to open a SIPP if I was on a standard, taxable salary because of the 20%/40% which gets added, but assuming my situation does not change, should I either:

A) Just invest into a global index tracker(s) privately.
Open a SIPP and put in the max amount each year and add to my position further privately.
C) Open only the SIPP and deposit the maximum amount, and invest further elsewhere (??)
D) None of the above -- Please explain.

This is all very confusing to me so apologies if these are not even sensible options -- first time exploring pensions/stocks. Cheers.

Given the questions you've asked, I wonder if you would find this link helpful - lots of helpful info: https://www.moneysavingexpert.com/banking/?_ga=2.25206333.1673629175.1523260900-353475065.1523260899

Marcon

eightbo wrote: »

2) If I've understood pensions correctly, I won't be able to access the funds until I'm around 60 - Absolute nightmare. I'm all for compound returns but if I can't access them to help buy a property outright when I want to, what's the point?

Why the melodrama? Pensions are long term savings for your later years, so why is it a 'nightmare' if you can't access them earlier in your life? Just means you are using the wrong savings vehicle for the goal you have in mind.