Opening a SIPP

Daz147

Just a question relating to SIPP's, I currently contribute about £400 net per month to a combination of 2 stakeholder, 1 old style personal pension and works pension. I have been saving at a rate of around £600 to £800 a month in cash, as a low risk type investor, would opening a SIPP with say AJ BELL to put this into rather than the usual ISA/savings acounts be wothwhile ?. Even if left in cash with no interest added then the 20% from the tax man would make it a good bet. Then perhaps move into some low risk multi asset funds.

Any thoughts welcome regarding this especialy the platform fees

SonOf

Even if left in cash with no interest added then the 20% from the tax man would make it a good bet

How would that be a good deal compared to a stakeholder/personal pension?

It may help us if you told us what you are trying to achieve.

xylophone

How would that be a good deal compared to a stakeholder/personal pension?

The OP appears to be contributing a total of £400 a month to a personal pension (with GAR it appears) a couple of stakeholders and a works pension.

On top of that, he is saving up to £800 a month in cash, presumably at interest rates of under 3%.

He is considering opening a SIPP and contributing the cash savings to it on the basis that even if left in cash, ( rather than risking investing) he would benefit from the basic rate tax relief added to the pension ( and from the small amount of interest paid by a SIPP provider).

Daz147

xylophone wrote: »

He is considering opening a SIPP and contributing the cash savings to it on the basis that even if left in cash, ( rather than risking investing) he would benefit from the basic rate tax relief added to the pension ( and from the small amount of interest paid by a SIPP provider).

Thanks for the replies, this is what I meant, I already have significant savings in cash ISA's at between 1.5% and 1.8% and have maxed my ISA allowance for this year. A 20% top up would be hard to beat, I looked at AJBELL and it looks like there are no costs to holding cash or I could have missed it ?

SonOf

A 20% top up would be hard to beat,

You get 20% tax relief. Not a 20% top up. If you treat the tax relief as an increment then its actually 25%.

I looked at AJBELL and it looks like there are no costs to holding cash or I could have missed it ?

But why do you want to hold cash?
Why are you looking at AJ Bell and not your existing plans (there may be good reasons but we dont know as you dont say).

I'm just digging for your reasons why as its not clear so far. Its hard to offer opinion/discussion when we dont know what the reasons are for choosing them and not other options.

Daz147

SonOf wrote: »

But why do you want to hold cash?
Why are you looking at AJ Bell and not your existing plans (there may be good reasons but we dont know as you dont say).

I'm just digging for your reasons why as its not clear so far. Its hard to offer opinion/discussion when we dont know what the reasons are for choosing them and not other options.

It was not intending to hold cash all the time, I did say there would be the option of moving into low risk funds and wanted to know if there are any platform costs incured with holding just cash. AJ BELL was just an example. I was not topping up my pensions any more at this time, the one with GAR cannot be increased, I was hoping to spread some risk without forgoing any tax breaks.

Also, the existing stakeholders are CIS \ Royal london and are not accessible online, not ideal to manage.

SonOf

Also, the existing stakeholders are CIS \ Royal london and are not accessible online, not ideal to manage.

What managing do you want to do?

Older plans built decades ago tend to have little or no web interface. However, most people don't need modern interfaces. Some of those old plans may be rather naff by modern standards but some are absolute gems worth keeping. So, it's more a case of making sure you are looking at the right options for the right reasons.

What can draw you to a provider can be unique to your requirements. So, it helps to know why are you are eliminating some and what you are looking for in others. Its all part of the filtering you can do when selecting options.

Audaxer

Daz147 wrote: »

Just a question relating to SIPP's, I currently contribute about £400 net per month to a combination of 2 stakeholder, 1 old style personal pension and works pension. I have been saving at a rate of around £600 to £800 a month in cash, as a low risk type investor, would opening a SIPP with say AJ BELL to put this into rather than the usual ISA/savings acounts be wothwhile ?. Even if left in cash with no interest added then the 20% from the tax man would make it a good bet. Then perhaps move into some low risk multi asset funds.

Some retired people over 55 open a SIPP and just add cash each year leaving it uninvested, so that when the tax relief is added each year, they can take out the cash straightaway, benefiting from the full tax relief, especially if their other income is under the personal tax free allowance. You have not said what age you are but if you are well off the age when you could withdraw money from the SIPP, you would be as well investing it in low risk multi asset funds now, rather than leaving it in cash, unless you have a particular reason for leaving it as cash meantime.

Daz147

Thanks for all the replies, I am 49 now and intend to take 1 pension at 60 because of the GAR attached to it, this will be in the form of an annuity. Opening a SIPP in this way may complicate things down the line regarding MPAA and any flexibility in the SIPP would complicate the contributions to the remaining pensions.

xylophone

Thanks for all the replies, I am 49 now and intend to take 1 pension at 60 because of the GAR attached to it, this will be in the form of an annuity. Opening a SIPP in this way may complicate things down the line regarding MPAA and any flexibility in the SIPP would complicate the contributions to the remaining pensions.

https://www.moneyadviceservice.org.uk/en/articles/money-purchase-annual-allowance

The MPAA won’t normally be triggered if:

You take a tax-free cash lump sum and buy a lifetime annuity that provides a guaranteed income for life that either stays level or increases

You take a tax-free cash lump sum and put your pension pot into a flexi-access drawdown scheme but don’t take any income from it

You cash in small pension pots valued at less than £10,000


If you are contemplating a modest SIPP, had you considered HL? They are considered expensive but might be worth considering for an all cash SIPP /modest value SIPP.