SIPP for Non Earning Partner

John905

While looking at my retirement options I discovered that we could use tax relief for my wife, who is not working at the moment and who has no plans to do so in the near future. She will be 55 in Oct 2021. Here are my thoughts:

Pay in £2880 to a SIPP for the current tax year and after that for the next 3 tax years. With the annual tax relief of £720 this should make a total pot of £14400 (+ or – investment returns/losses). On her 55th birthday she could then take £3600 tax free, with another £11850 tax free by staying below her annual tax allowance. Have I missed anything obvious with this plan?

Also, with the relatively short length of the investments has anyone any suggestions for investment strategies, given that the main aim would really be to minimise risk and ideally match the inflation rate?

xylophone

You could choose not to invest at all but simply to regard the tax relief as though it were generous interest on a savings account.

HL do not charge for holding cash in a SIPP.

https://www.hl.co.uk/pensions/sipp

Dazed_and_confused

Why will she be stopping doing this at 55?

She might want to check pension provider fees for your specific suggestion i.e. taking everything all in one go.

Audaxer

John905 wrote: »

While looking at my retirement options I discovered that we could use tax relief for my wife, who is not working at the moment and who has no plans to do so in the near future. She will be 55 in Oct 2021. Here are my thoughts:

Pay in £2880 to a SIPP for the current tax year and after that for the next 3 tax years. With the annual tax relief of £720 this should make a total pot of £14400 (+ or – investment returns/losses). On her 55th birthday she could then take £3600 tax free, with another £11850 tax free by staying below her annual tax allowance. Have I missed anything obvious with this plan?

Also, with the relatively short length of the investments has anyone any suggestions for investment strategies, given that the main aim would really be to minimise risk and ideally match the inflation rate?

It's a good plan, apart from thinking about investing in the SIPP in your wife's situation. I would use HL and leave it as cash. If at 55 she then wants to invest the £14,400, best to invest it in an S&S ISA. Or she could invest £13,400 in an S&S ISA and leave £1,000 in the SIPP at 55, and then pay in £2,880 each subsequent year. After tax relief is added, draw out £3,600 and repeat with the same £2,880 in subsequent years, earning £720 each year.

John905

Many thanks for the replies, your information was both informative and reassuring. At first I thought this seemed too good to be true, but it appears not. Just hoping the rules don't change for the worse in the near future.