SIPPs for a married couple

HamAndCheese

Hi All,

Could I ask for some advice?

I am a higher rate tax payer and my wife is just over the taxable threshold.
We have already used all our ISA allowance and we are lucky to have ended up with a surplus of cash to use for retirement.

Options I am considering...

1.  Invest all the money into a SIPP in my name to get the maximum goverment top-up
2. Invest half in my name and half into my wifes name and accept less government top-up

I am aware that if I die my wife inherits the SIPP but she would like something in her name so that if we divorce she wouldn't be left without anything. Having said that some sources report that the SIPP is considered as a part of the estate in divorce.

Are there any other considerations?

Very grateful for your guidance!

xylophone

A SIPP is a pension.  Pensions are taken into account in divorce.
https://www.barnett-waddingham.co.uk/comment-insight/blog/divorce-and-sipp/

Dazed_and_C0nfused

How much are thinking of contributing in total (the net amount before basic rate tax relief is added)?

MallyGirl

You shouldn't just think about it on the way in - you should also think about tax efficiency on the way out too. Does she have enough pension accrued to use all of her £12k tax free band (or whatever it is by then) when receiving as pension income?

Marcon

HamAndCheese said:

I am aware that if I die my wife inherits the SIPP but she would like something in her name so that if we divorce she wouldn't be left without anything. Having said that some sources report that the SIPP is considered as a part of the estate in divorce.

She doesn't necessarily inherit the SIPP if you die first. Have you completed an Expression of Wish (aka Nomination Form) for your SIPP provider?

If you divorce, pension schemes are taken into account when arriving at any financial settlement - or more accurately, they should be. Many people who have 'saved money' by going the DIY route have paid a high price for their economy.

LHW99

As Mally Girls says - in retirement you still each have a personal allowance. So one reason to put money in a SIPP for your wife would be that you would effectively have twice as much untaxed income. E.G. as the rate is at present, if all the pension income was in your name, your total allowance to set against it, even as a couple would be £12500, whereas if you each have a pension, you have £25000 total allowance before tax, as a couple. (although SP will reduce the amount left for private pensions).