Pension options for my wife

TrickyDicky101

My wife is currently a SAHM with no earned income.

She is approaching her 40th birthday and has, to date, no pension savings, although she will be due a full SP when she reaches the normal state retirement age (even if that's 28 years' away).

We currently have access to funds from a discretionary trust and one use I believe would make sense is for my wife to contribute £2,880 to some form of pension to take advantage of the tax relief provided by the state.

What suitable pension options are available to achieve this? Would she be limited to Stakeholder Pension Schemes (SHPs) or are there other choices available?

We have no immediate need or use for the money that would be directed into any such pension scheme.

Tom99

TrickyDicky101 wrote: »

My wife is currently a SAHM with no earned income.
She is approaching her 40th birthday and has, to date, no pension savings, although she will be due a full SP when she reaches the normal state retirement age (even if that's 28 years' away).

Are you sure? Age 40 she cannot yet have earned a full state pension without further contributions, some of which might be from child allowance until your youngest child is 12, I think, it used to be age 16.
A state pension forecast age 40 will assume your wife pays NI from now until retirement age 68.

TrickyDicky101

Tom99 wrote: »

Are you sure? Age 40 she cannot yet have earned a full state pension without further contributions, some of which might be from child allowance until your youngest child is 12, I think, it used to be age 16.
A state pension forecast age 40 will assume your wife pays NI from now until retirement age 68.

Yes - apologies for lack of clarity. Until youngest is 12 she will be entitled to full credits towards SP. After that point (and up until SP age) I expect she will earn sufficient years to qualify for a full SP. She does not currently have the 35 qualifying years.

Tom99

You can do a £2,880 SIPP with say Cavendish, one of the lowest SIPP charges at 0.25% I think and plenty of choice of Funds to choose from. If you do that then invest 99% and keep 1% cash, that way your monthly 'fee' of a few pence gets taken from the £28 cash rather than selling a bit of a fund unit every month.

TrickyDicky101

Tom99 wrote: »

You can do a £2,880 SIPP with say Cavendish, one of the lowest SIPP charges at 0.25% I think and plenty of choice of Funds to choose from. If you do that then invest 99% and keep 1% cash, that way your monthly 'fee' of a few pence gets taken from the £28 cash rather than selling a bit of a fund unit every month.

Thanks Tom - that is a very flexible option. I've been looking at the Cavendish ISA to park my (annual) savings too.

Would you happen to know whether Cavendish 'pre-fund' the tax relief at the point of deposit into the SIPP or if there would be some delay (eg subsequent claim)?

Tom99

TrickyDicky101 wrote: »

Thanks Tom - that is a very flexible option. I've been looking at the Cavendish ISA to park my (annual) savings too.

Would you happen to know whether Cavendish 'pre-fund' the tax relief at the point of deposit into the SIPP or if there would be some delay (eg subsequent claim)?

No there is about a 2 mth delay and the funds are invested in exactly the same fund you choose for the £2,880.
The Fidelity web site, which you use via Cavendish, is pretty basic, no performance info, not even cost v value for SIPPs and when you want to top up the next year with another £2,880 I think you have to send off a form or something. Very basic, but its cheap, and since at £2,880 you are more than likely just to invest in one fund the fact its not the bees knees really does not matter.
Cavendish are very good at replying to emails if you have any queries, you get the impression its 2 men and a dog but they seem to be on the ball.

TrickyDicky101

Performance info is not important to me. Simple and cheap are important considerations. Many thanks - I have read through the Cavendish documentation available.

It would be an ongoing £2880 annual investment so that's useful information.

Thanks again!

TrickyDicky101

This is a follow up to say my wife has applied for the Cavendish online pension account and deposited her first £2880.

Thanks very much Tom99.

cloud_dog

TrickyDicky101 wrote: »

This is a follow up to say my wife has applied for the Cavendish online pension account and deposited her first £2880.

Thanks very much Tom99.

Did you consider utilising a LISA for your wife, as long as it is opened before age 40.

TrickyDicky101

cloud_dog wrote: »

Did you consider utilising a LISA for your wife, as long as it is opened before age 40.

Missed the age deadline on that, sadly - would have been a good option too!

atush

TrickyDicky101 wrote: »

This is a follow up to say my wife has applied for the Cavendish online pension account and deposited her first £2880.

Thanks very much Tom99.

Well done.

Have you thought of using her annual S&S isa allowance too?