Pension / SIPP for the wife

swindiff

Wife and I are both 48 with plans to be retired at 60. My wife works for the NHS and has a pension that should be worth around £5k a year by then. This leaves using current figures a £7k/year unused personal tax allowance, so looking at something to bridge the years between 60 and 67 when she should get full state pension.

Neither of us are well clued up on investing so looking at something that she can make a monthly payment into, would be nice to keep track of how things are going but don't want to have to actively manage it ourselves.

In a position to currently pay in £200/month, which would get an uplift to £250 with tax relief. In 12 years assuming 5% annual returns this could be worth around £50k when she retires. She could then take £12.5k tax free and around £5k/year for 7 years and pay no tax on it at all.

From reading and recommendations on here the Vanguard Life Strategy 80 seemed a suitable fund to invest in and we have been waiting for Vanguard to start offering their own SIPP platform which was supposed to be up and running by the end of last year but still no sign of it.

So the question is what is her best option from here. I recently opened a Hargreaves Lansdown SIPP for my mum to take advantage of the £720/year tax benefit as she is only on state pension and their web interface seems fairly intuitive and they are very prompt in responding to questions, but are they the best value option for what my wife wants to do?

If she pays in by DD every month can that automatically be used to purchase Vanguard80 stock or is it best to leave it as cash and do one or 2 trades a year? Do you pay fees for trades or is it an overall charge depending on the value of the SIPP?

Thanks for any help and advise in advance.

dunstonh

From reading and recommendations on here the Vanguard Life Strategy 80 seemed a suitable fund to invest in and we have been waiting for Vanguard to start offering their own SIPP platform which was supposed to be up and running by the end of last year but still no sign of it.

Vanguard is not the only pension provider in the country (and technically not a pension provider at all as it stands). Unless you pray at the church of Vanguard then use someone else.

I recently opened a Hargreaves Lansdown SIPP for my mum to take advantage of the £720/year tax benefit as she is only on state pension and their web interface seems fairly intuitive and they are very prompt in responding to questions, but are they the best value option for what my wife wants to do?

HL are one of the more expensive platforms. However, their software is good. With small amounts though, it really doesnt matter if its a bit more expensive in the earlier years as the amounts will be so low.

If she pays in by DD every month can that automatically be used to purchase Vanguard80 stock or is it best to leave it as cash and do one or 2 trades a year?

The quicker you buy, the better it is in most periods.

Do you pay fees for trades or is it an overall charge depending on the value of the SIPP?

It depends on the SIPP. Although with such a small amount, it may be better with a stakeholder pension in the growth stage.

swindiff

dunstonh wrote: »

Vanguard is not the only pension provider in the country (and technically not a pension provider at all as it stands). Unless you pray at the church of Vanguard then use someone else.

The only reason really for thinking of using Vanguard for the SIPP platform was the assumption (rightly or wrongly) that the charges may be lower if investing in Vanguard funds. As you say this is never going to be a massive pot so maybe we should just take the plunge and go with HL

dunstonh

The only reason really for thinking of using Vanguard for the SIPP platform was the assumption (rightly or wrongly) that the charges may be lower if investing in Vanguard funds.

As Vanguard dont offer a pension it is impossible to guess their charges. We can talk about their funds as they are available. However, VLS is no longer the cheapest of the multi-asset funds offering underlying passives. We used to use VLS a lot on transactional investments but not any more. For example, VLS60 has total charges of 0.33% compared to 0.20% for HSBC. (not a recommendation but a comparison).