Where to put additional contributions

Stoodles

After an inheritance we plan to maximise Mr Stoodles' pension contributions this year. He is currently paying into a workplace pension (Peoples Pension) and an Aviva Personal Pension, and has two more personal pensions he is not currently contributing to. These will probably all be transferred into one pot, but not before April. Is it best to pay the additional sums into one of the two active plans, or to open a SIPP that might end up being transferred very soon after opening?

Notepad_Phil

Paying into one of the existing pensions is likely to be the easiest way to do this, but whether that is the best thing to do depends on the costs and funds available on the different existing platforms and the possible new SIPP and how that fits in with what you are intending to do.

With regard to a possible transfer of any new SIPP, just make sure there are no penalties for transferring out and that it allows in-specie transfers out if that is what you would plan to do.

Albermarle

Seems pointless to open up a new pension and then to transfer it 3 months later .
A good reason to open up a SIPP , would be if you planned to actually  transfer the other pensions into it . 
The advantage of a SIPP is access to thousands of possible investment choices and maybe lower charges.
However the workplace pensions are more suitable for inexperienced investors,

Stoodles

This is proving more complicated than we expected, for reasons related to the employer. I had thought it was urgent, because the payment needed to be completed during the tax year. Now I've read about carry forward, it seems we could wait until we've selected an IFA and then make the contributions, in April or May. Is that right? Is there a risk that it all might change in the Budget?

Dazed_and_C0nfused

How much exactly is he thinking of contributing?

Will it be more than £40k?

Stoodles

No, just over £26K for the current year.

Dazed_and_C0nfused

Not sure how he can use carry forward then?

Stoodles

So it does need to be completed this tax year?

Dazed_and_C0nfused

Why do you think it needs to be completed this tax year?

How much are the pensionable earnings this tax year?

How much are the pensionable earnings likely to be next tax year?

Stoodles

1 Because I've read elsewhere on this forum someone saying they needed to estimate their earnings before the year end in order to make their full contributions, and no-one responded that this was not the case. I recognise this is not logically conclusive

2 Pensionable earning this year approx £36k

3 Next year only £9k

MallyGirl

you cannot contribute more than you earn in the tax year