SIPP and Teachers Pension

Oliver1191

Hello,

can anyone help with these retirement planning questions. I'm 35 now, and know the landscape can change in the future, however, I would like to know if the following is possible...

1. I have a Teachers' Pension and a SIPP. Most people on this site believe when it comes to retiring, it's better not to take the lump sum from the Teachers' Pension, but rather keep the guaranteed income. On this basis, is it the case that my SIPP could be counted as my 'lump sum' / 25% and therefore that I could take most of it out without paying income tax.

To help with this question: my Teachers' Pension is currently worth around £9500 income a year, and will likely double by the time I get to retirement. My SIPP is currently 16k, but will likely grow over 100k (hopefully more), especially with continued deposits.

2. I can't take my Teachers' Pension (if I want the full amount) until 68. Can I still take my SIPP out as a lump sum at 58 (if the pension age rises from 55) and have it count as the 25%?

Thank you!!

justme111

Oliver1191 wrote: »

Hello,

can anyone help with these retirement planning questions. I'm 35 now, and know the landscape can change in the future, however, I would like to know if the following is possible...

1. I have a Teachers' Pension and a SIPP. Most people on this site believe when it comes to retiring, it's better not to take the lump sum from the Teachers' Pension, but rather keep the guaranteed income. On this basis, is it the case that my SIPP could be counted as my 'lump sum' / 25% and therefore that I could take most of it out without paying income tax.

To help with this question: my Teachers' Pension is currently worth around £9500 income a year, and will likely double by the time I get to retirement. My SIPP is currently 16k, but will likely grow over 100k (hopefully more), especially with continued deposits.

2. I can't take my Teachers' Pension (if I want the full amount) until 68. Can I still take my SIPP out as a lump sum at 58 (if the pension age rises from 55) and have it count as the 25%?

Thank you!!

My understanding : no you can not count it like 25% of your total pension arrangements. You can take 25% of £100000 or whatever is in there and the reminder draw over the years that you do not work paying usual tax.

Bimbly

Your SIPP is separate from your teachers pension.

So, you can take 25% of your SIPP tax free when you are at an age when you can access your pension (currently 55, but likely to be 58 for you as you say).

You can use the money in the SIPP to bridge the gap between 58 and 68 when your teachers pension becomes payable if you want. This is an advantage of the SIPP as it is not linked to your teachers pension.

Note: some people who pay AVCs alongside their occupational pension can use this as their tax free lump sum, but in their case it would be linked to the occupational pension and only accessed at retirement when they take their main pension. This may have been what you were confused by. Although I understand AVCs are being phased out and are now rare.

Oliver1191

Thanks Bimbly, I didn't realise that AVCs could be used as the 25% lump sum.

I had stopped paying into the Teachers' AVC and transferred it into a SIPP in order to seek higher growth and make more informed decisions.

However, on this basis, I wonder if it's worth paying a small amount into an AVC- there are 33 years to go until i'm 68...that's a lot of growth time (even on small contributions).

AlanP_2

Not all schemes allow AVC pot to be taken as full TFLS so check rules first.

jem16

Oliver1191 wrote: »

Thanks Bimbly, I didn't realise that AVCs could be used as the 25% lump sum.

I had stopped paying into the Teachers' AVC and transferred it into a SIPP in order to seek higher growth and make more informed decisions.

However, on this basis, I wonder if it's worth paying a small amount into an AVC- there are 33 years to go until i'm 68...that's a lot of growth time (even on small contributions).

AVCs in the TPS cannot be used in this way. They are separate just like the SIPP would be.