Urgent SIPP/Pension advice: Pre End Tax Year 2018/19

[Deleted User]

Hi everyone

I would be really grateful for some urgent advice please - I have delayed making a decision and now I am against time as the end of tax year looms.

I have a SIPP with the Suffolk Life platform (value £c170k). The investment "in" the SIPP is managed (poorly) via AFH Wealth Management.

I have been with AFH & its discretionary managed service since 2011 (I know better now) and for a number of reasons (fees, investment performance, poor service from AFH, etc but definitely not just a whim):

- I need to compare Suffolk LIfe's SIPP platform fees but if they are comparable to others, would I be able to stay with Suffolk LIfe and merely change the management of my investments ie self manage to find another investment manager?

- if I choose to move to a different SIPP provider (& also move away from AFH and managed investments myself (albeit by choosing a managed fund eg Vanguard etc):

Questions:

1. How quickly can I set up a new SIPP & make a lump sum payment into it (see below re my pre EOY plans)?
2. Is it better to set up new SIPP and concentrate on getting my 2018/19 EOY lump sum & tax relief before tax year ends AND then do the transfer across from Suffolk Life?
3. I am looking to stick to standard investment choices ie not commercial property - so should I consider a private pension rather than a SIPP?
4. I am looking to manage the investment myself but realistically will be choosing a mix of lifecycle funds
5. Which Investment platform would suit my profile ie that of choosing a funds mix and realistically not undertaking multiple transactions: I have been looking at II, AJ Bell, Cavendish Online etc

The SIPP has current value of c£170k - I have made nil contributions to it this tax year but I will be looking to do an end of year lump sum to gain the 20% tax relief top up.

I am in a DC employment pension where via Salary sacrifice I contribute 8% of my salary (employer adds 12%) and I also do a salary sacrifice monthly AVC of £1495, leaving me with a gross salary just above the point at which I earn my NI contributions to State Pension etc. Current value of DC Pension is c£65k

At year end I also make a non salary sacrifice AVC lump sum top up payment into my employers DC Pension. I can do this up to the maximum tax I have paid rather than my gross salary. (forgive me, I forget the type of pension arrangement that dictates this, but I made the mistake last year of trying to do a lump sum based on my gross salary and I lost out on a substantial amount of tax relief)

So basically I need to do TWO end of tax year lump sums payments to my pensions to ensure I get maximum tax relief benefit (as a base rate tax payer).

1. Gross Payable as Non AVC Lump Sum to Employers Pension
Gross Salary (post AVCs) minus Personal Tax Allowance of 11,760 = £7,491
Therefore my payroll dept will ask me for a cheque for the 0.8 net = £5,993 and with the tax relief applied my DC pension will be credited with the full £7,491

2. Top up my SIPP to the amount of my Personal Tax Allowance = £11,760
I contribute Nett amount of £9,408
SIPP applies for tax relief contribution of = £2,352

I also have a previous employers DB Pension, current projected income is circa £12k a year
I will have earned max State Pension with 2 more years NI contributions (I am 52 now hence I am comfortable putting bulk of my disposable income into Pension and then S/S ISA). I am in no danger of exceeding the pension lifetime allowance before I retire (56/57 years?)

Mortgage is paid off and have no debt. I have c£80k in S/S ISA, £25k in Cash ISA and Rainy Day money in Premium Bonds.

I feel I have been sensible with finances & lucky to have been born in the generation I was ie a house was "buyable" despite only ever earning pretty much average UK wage.

If you have not lost the will to live after all of the above.......................Thank you

Ells:j:j:j:j:j

AnotherJoe

1. How quickly can I set up a new SIPP & make a lump sum payment into it (see below re my pre EOY plans)?
2. Is it better to set up new SIPP and concentrate on getting my 2018/19 EOY lump sum & tax relief before tax year ends AND then do the transfer across from Suffolk Life?
3. I am looking to stick to standard investment choices ie not commercial property - so should I consider a private pension rather than a SIPP?
4. I am looking to manage the investment myself but realistically will be choosing a mix of lifecycle funds
5. Which Investment platform would suit my profile ie that of choosing a funds mix and realistically not undertaking multiple transactions: I have been looking at II, AJ Bell, Cavendish Online etc

1. A few weeks. You have time.
2. I would, avoids all sorts of potential messes and takes pressure off you.
3. A SIPP is a private pension. So not sure what you mean by that. I dont have any commercial property in my SIPP, I am sure most don't.
4. OK...... Do you mean "Lifestyle" ? Ones that change the % of equity:bonds as you age? Most would advise against that now
5. I think it comes down to two factors, cost and ease of use. I am with HL and although they get slated for high costs, thats only true if you use funds or mostly funds. For ETFs and shares they are very competitive. Search for "snowmans spreadsheet" for the ability to analyse costs. You might decide as I have done, that, say, an extra £100 or £200 a year for a slick platform with no admin issues, is preferable to rock bottom pricing and a ton of of hassle. You'll also find, judging by recent developments, that the cheaper platforms tend to raise their prices after a while so unless you want always to be switching, better to pick something middle priced.

mgdavid

1. A few days; I set up a SIPP online with Charles Stanley (CSD) and it was all done and dusted in 6 days, the first actual transfer in from another scheme took 2 to 3 weeks from there.
2. I would do both, it's not difficult or very time consuming.
4. If looking to retire in 5 years time you probably want to be cautious, i.e. low risk, suggesting index trackers might be best?
5. the main platforms seem to all offer roughly the same choice of investments, the choices run into the thousands. Cost and service would probably be your drivers, I've had very good service from CSD but my situation is very different as I only went SIPP after retirement so I'm not adding or trading.

gadgetmind

SIPPs can let you hold commercial property, gold, etc. but most are private pensions with a different name TBH.

I have used Best Invest and HL for SIPPs and I get lower fees with the former but the latter have good service and low fees as long as you choose investments with care.

By "lifecycle" do you mean Vanguard Lifestrategy? Or something else?

Oh, and do your annual allowance calculations with care, and I'm afraid that you still need to consider Pension Input Periods, which are deeply nasty.

[Deleted User]

gadgetmind wrote: »

SIPPs can let you hold commercial property, gold, etc. but most are private pensions with a different name TBH.

I have used Best Invest and HL for SIPPs and I get lower fees with the former but the latter have good service and low fees as long as you choose investments with care.

By "lifecycle" do you mean Vanguard Lifestrategy? Or something else?

Oh, and do your annual allowance calculations with care, and I'm afraid that you still need to consider Pension Input Periods, which are deeply nasty.

Hi Thanks for your reply.

Yes I was thinking of a SIPP and HL and Best Invest are in the mix along with II, Cavendish, AJ Bell etc. Realistically because of time constraints I am edging towards the likes of a platform that can offer alot of guidance.

YES sorry I meant mean Vanguard Lifestrategy.

HELP: Pension Input Periods?????
So I think I have calculated accurately my pension annual allowance calculations
ie For the tax year 2018/19 I can make contributions into my Employers DC Pension and my SIPP up to a total value of my annual gross salary & bonus (which has been reduced by all the all the AVCs made via salary sacrifice). My payroll manager & my Staff Financial Advisor (I work for an Insurance & Investment mutual) have both confirmed that my calculations (based on payslips) and that I have no other pensions inputs this year, are correct.

I have googled Pension Inout Periods but I have no idea what this means:

What is a PIP?
A “pension input period” (PIP)1 is used to assess annual increases in the value of members’ pension savings for the purpose of testing against the AA. Increases are measured against the AA for the tax year in which the PIP ends.

The PIP may be different for each scheme and, within a particular scheme, different arrangements may also have different PIPs. However:

there must be a PIP for each arrangement ending in each tax year;
a member may not have more than one complete PIP per arrangement in a tax year; and
it is not possible for a PIP to be longer than 12 months

In previous years I have made pension contributions to both my employers DC pension and also my AFH managed SIPP up to my annual allowance (gross salary) so I am really confused as to what PIP means?

Thank you

gadgetmind

Pension Input Periods used to be the bane of my life! They are an utter paid with DB but it sounds like you don't have any of this. But they are still a pain!

Contributions to pensions for annual allowance calculations, and working out carry forwards, are *not* done on a per tax year basis, though they have moved closer to this. Each scheme used to have its own PIP based on when you made your first contribution, others had made the decision to tax year align them, and you could also (with some restrictions) choose to change your PIP.

So you had to look at each contribution on a per scheme basis to work out into which PIP the contribution fell, and then all of these were deemed to have been made in the tax year where the PIP ended. Given that the exact day contributions were made could vary a little, it was never easy and required details of all payments and PIPs.

Then in June 2015 it all changed. There was a three month pre-budget mini PIP, so April to June 2015 were there own special period, with even more carry forwards rules, but generally this benefited people. After this, all PIPs were tax year aligned, but you *still* need to know when payments go in as one on April 5th is in a different PIP (and tax year) to one on April 6th.

If you have enough carry forwards such that this "dither" levels out from year to year, then it doesn't matter too much, but I'm not sure you have.

Maybe ask your current advisors for their PIP and carry forwards calculations to date?

BTW I do know people who decided that PIPs were all too much trouble, and they'd assume they made 12 contributions per tax year, and it's entirely possible that HMRC are cool with this or just accept that the effort for them to check is too much like hard work!

I started making much larger contributions in 2007, and allowances were also starting to come down, so I've been doing painstaking tracking since then, and have also voluntarily changed PIPs at various times, and started new schemes with tax year aligned PIPs, to let me do "trickery" with what went where.

I just had to open my tracking spreadsheet to check some dates and it brought back lots of horrible memories!