Opening a SIPP

chattykathyblue

Looking for advice for my 57 year old brother.

He's always been a 'self employed' construction worker and so has never had an opportunity to save into a pension. He's about to receive a £10,000 inheritance and really needs to invest it for his old age! He also earns enough to regularly save. Would opening a SIPP be the best way to go so he gets the tax relief? What other options should he consider?
TIA

dunstonh

He's always been a 'self employed' construction worker and so has never had an opportunity to save into a pension.

He has had plenty of opportunities. He has just chosen not to.

Would opening a SIPP be the best way to go so he gets the tax relief?

Possibly. It would be better than doing nothing. Although it depends on whether he is comfortable with a SIPP and its more advanced options. A stakeholder pension or personal pension or simple master trust pension may be simpler for him.

Albermarle

What other options should he consider?

Three basic options, if you do not need the money now are:
1) Put the £10K into a cash savings account ( best with a maximum fixed rate, for 5 years for example ) Money is safe and the interest is nearly enough to keep up with inflation .
2) Put it in a pension, in a medium risk fund . Tax relief on the way in but pay some ( less) tax on the way out . Leave it there for at least 5 years to allow for some ups and downs in the markets but hopefully will go more than inflation in the longer term.
3) Put it in a Stocks and Shares ISA with the investment being in a medium risk fund . No tax relief on the way in but no tax on the way out either. As above also leave for minimum 5 years .

Further monthly contributions can be made for options 2 & 3 . For option 1) you would have to use a lower interest easy access savings account, or you can look into regular savings current account deals .

If you decide to go down the pension route ( probably the best idea) then as already said you would be better with a personal or stakeholder pension as they are simpler to operate than a SIPP.

chattykathyblue

dunstonh wrote: »

He has had plenty of opportunities. He has just chosen not to.



Possibly. It would be better than doing nothing. Although it depends on whether he is comfortable with a SIPP and its more advanced options. A stakeholder pension or personal pension or simple master trust pension may be simpler for him.

Thanks for the comment on his opportunities 🙄
I was referring to the fact that he hasn't had an occupational pension that many of us have had. I'll pass on your advice about the stakeholder /personal pension, thanks

chattykathyblue

Albermarle wrote: »

Three basic options, if you do not need the money now are:
1) Put the £10K into a cash savings account ( best with a maximum fixed rate, for 5 years for example ) Money is safe and the interest is nearly enough to keep up with inflation .
2) Put it in a pension, in a medium risk fund . Tax relief on the way in but pay some ( less) tax on the way out . Leave it there for at least 5 years to allow for some ups and downs in the markets but hopefully will go more than inflation in the longer term.
3) Put it in a Stocks and Shares ISA with the investment being in a medium risk fund . No tax relief on the way in but no tax on the way out either. As above also leave for minimum 5 years .

Further monthly contributions can be made for options 2 & 3 . For option 1) you would have to use a lower interest easy access savings account, or you can look into regular savings current account deals .

If you decide to go down the pension route ( probably the best idea) then as already said you would be better with a personal or stakeholder pension as they are simpler to operate than a SIPP.

Thank you for your detailed advice, I'll pass it on

xylophone

A simple stakeholder might suit.

https://www.cavendishonline.co.uk/stakeholder-pension