SIPP or company pension?

bertpalmer

Hi everyone!

I run my own small limited company and until now have saved everything in an investment ISA which I manage myself.

But I’d like to start a small SIPP - as I specifically know what I want to invest in.

Because I’m a director and run a company - do I need to open a company pension? My accounted hinted this might be the case. But I’d prefer a personal pension as I don’t know how long the company will last. Maybe another 5-10 years.

Thanks in advance!

Linton

Your company can pay into a personal pension/SIPP.

dunstonh

I run my own small limited company and until now have saved everything in an investment ISA which I manage myself.

Good that are you investing but in most cases, pension would beat ISA in your scenario.

because I’m a director and run a company - do I need to open a company pension?

No. an individual one is fine.

My accounted hinted this might be the case.

Accountants stopped giving regulated advice in the mid 90s. Their knowledge can often be stuck in that period. Although most usually refer you to their preferred IFA or your own IFA rather than guess (wrongly).

bertpalmer

So I can just open a personal a pension? I’m glad it’s that simple.

Surely a pension would get the same returns assuming fees are the same?

dunstonh

Surely a pension would get the same returns assuming fees are the same

Absolutely. However, ISA contributions are out of net income. So, you have suffered corporation tax and dividend tax (probably not NI as most directors avoid that). Pension reduces the corporation tax and gets money out of the company with no NI, income tax or dividend tax on it.

greenglide

It is the company that should be paying the pension contributions as this is the most tax efficient.

Personal contributions when a controlling director is not a good idea.

bertpalmer

greenglide wrote: »

It is the company that should be paying the pension contributions as this is the most tax efficient.

Personal contributions when a controlling director is not a good idea.

But can the company pay the contributions to my own personal SIPP? Or does it have to be to a company pension?

It's starting to sound complex :sad:

xylophone

http://www.hl.co.uk/pensions/sipp/how-much-can-i-invest/employer-contributions/employer-case-study

https://www.taxcafe.co.uk/pensionmagic.html might be worth a read?

Have you obtained a state pension statement?

https://www.gov.uk/check-state-pension

dunstonh

But can the company pay the contributions to my own personal SIPP? Or does it have to be to a company pension?

Nearly all individual schemes accept company contributions. Company pensions require more people to make them cost effective (except the bottom end of the market with basic auto-enrolment schemes which you dont really want)

atush

Using an ISA, you have been missing a trick all thes years by not using a Pension.

Get onto it tomorrow. You can have one open, and have the company pay in (not you) by dinnertime.

honestsammy

I am in a similar situation. I have an old company group pension with the prudential and after much faffing I was told first that I'd be able to make payments from the company, and then after 6 months of doing so, was told that I couldn't. Feel quite messed around by the pru.

Anyway I have contacted several companies like Aegon and Aviva and all have said they would not take me as a customer unless I spoke to an IFA. Reluctantly arranged a meeting but was told that it wasn't worth his while and would have to charge around £1k for his services as a flat fee. He was very up front about it but based on the conversation he told me off the record that I should just open a SIPP with HL or someone like that. This is what I'm researching now.

I have to say that it's not been the easiest experience and I wonder what other small companies have had to do with pension auto enrollment. Sounds like an expensive nightmare.