Paying into a SIPP

CliffordSquirrel

I pay into a SIPP (Virgin money) to obtain the tax relief as I no longer work (age 64). I have found the Virgin SIPP rather complicated and intend to withdraw the pension and close the account. Can anyone suggest a better SIPP to obtain the tax relief and then invest in Vanguard?

Dazed_and_C0nfused

Do you mean withdraw or transfer the existing funds to a new provider?

What is it that you find complicated?  This would be a pointer as to which other providers might be more suitable.

dunstonh

I pay into a SIPP (Virgin money) 

Is this a new product?  Virgin didn't offer a SIPP last I looked.  They had a stakeholder pension but announced they are working on a new personal pension.  However, SIPP isn't mentioned on their website.

 I have found the Virgin SIPP rather complicated and intend to withdraw the pension and close the account.

What is difficult?  If its the stakeholder pension then It only has a handful of funds.

Can anyone suggest a better SIPP to obtain the tax relief and then invest in Vanguard?

If you are having difficulty with a stakeholder pension with a handful of funds, I am not sure a SIPP would be that helpful for you.

CliffordSquirrel

My original; plan, like many women of my age group who have retired but have to wait longer for a pension, was to invest the £2,800 into a SIPP and then, when the £720 tax relief was paid, withdraw it all - just leaving enough to keep the account open, and reinvest the money in my Vanguard Lifestrategy investment.   Virgin's Personal Pension is a SIPP by definition (Self Invested Personal Pension) but (a) the site is cumbersome to use and (b) you cannot withdraw money without talking to a staff member and having forms sent out in the post.   (Since Covid, having to talk to anyone in any business is a nightmare in itself!)

My son suggested I switch to Hargreaves Lansdowne.   I was originally put off because there is an annual fee and a fee for each transaction but he says the £720 tax relief is basically free money, so if HL take £40-50 off me, I am still quids in.   What do you think?   

MK62

I'm not sure you'll find any platform which allows you to make withdrawals without speaking to anyone and filling out forms....I believe it's in the regulations that they must ascertain that essentially you know what you are doing and are aware of any consequences.

jimi_man

CliffordSquirrel said:

My original; plan, like many women of my age group who have retired but have to wait longer for a pension, was to invest the £2,800 into a SIPP and then, when the £720 tax relief was paid, withdraw it all - just leaving enough to keep the account open, and reinvest the money in my Vanguard Lifestrategy investment.   Virgin's Personal Pension is a SIPP by definition (Self Invested Personal Pension) but (a) the site is cumbersome to use and (b) you cannot withdraw money without talking to a staff member and having forms sent out in the post.   (Since Covid, having to talk to anyone in any business is a nightmare in itself!)

My son suggested I switch to Hargreaves Lansdowne.   I was originally put off because there is an annual fee and a fee for each transaction but he says the £720 tax relief is basically free money, so if HL take £40-50 off me, I am still quids in.   What do you think?   

I'm not sure what you mean? I'm with HL and there are no transaction charges as far as I am aware for funds (such as Vanguard LS). I buy them every month and have never been charged. The annual fee is 0.45% (plus fund charges, I can't recall what LS charges are - say 0.15%). Even at 0.6% in total it's just over £21 - nowhere near £40-50.

They aren't the cheapest by any means, but I find them perfect for what I want and the customer service is excellent, though that's not to say that other companies customer service is rubbish.

dunstonh

Virgin's Personal Pension is a SIPP by definition (Self Invested Personal Pension) 

I am happy to be corrected but I believe you are wrong.   Their site makes no reference to a SIPP being available.   Just a stakeholder pensions and personal pension.  Personal pensions (PPP) are not SIPPs.

but (a) the site is cumbersome to use and (b) you cannot withdraw money without talking to a staff member and having forms sent out in the post.   (Since Covid, having to talk to anyone in any business is a nightmare in itself!)

This is probably why they are building a new pension.

My son suggested I switch to Hargreaves Lansdowne.   I was originally put off because there is an annual fee and a fee for each transaction but he says the £720 tax relief is basically free money, so if HL take £40-50 off me, I am still quids in.   What do you think?   

There is an annual fee on all pensions.    The main difference between SIPPs and personal pension is the unbundling of charges.  The Virgin SHP or PPP is mono charged (like most PPP & SHP).  i.e. it has the annual management charge and everything is paid out of that.     A SIPP unbundles the charging so you can see the cost of each element.   So, you have the SIPP provider charges plus the fund charges.   If you pick a SIPP provider at 0.25% and a fund at 0.25% then your total charge is 0.5%.    That is what you compare to the Virgin pension.   For example, the Virgin Pension Growth Fund 3 costs 0.85% p.a.

Albermarle

In any case whatever you do , do not withdraw it .
Open up a new pension with HL, and then request a transfer giving them the details of the Virgin Pension, 
HL will then arrange the transfer .

LHW99

If you keep the money in HL in cash, I believe there is no charge

https://www.hl.co.uk/help/sipp,-drawdown-and-annuity/sipp/investments/can-i-hold-cash-in-the-vantage-sipp-and-earn-interest

But I think you have to keep a minimum amount in for a year, else it is closed (check with them, they are usually very helpful).

CliffordSquirrel

Thank you for the replies - this is very helpful.

CliffordSquirrel’s son here to help clarify:
- Dad 63, lower rate tax payer, still working and claiming pension;
- Mum 64, non-worker, earns small amount from single BTL.  No pension provision;
- Own mortgage paid off, saving in (8k) Marcus and (12k) S&S ISA (Vanguard LifeStrategy100) to save towards retirement, planned in about 2 years time (VG to be used later on in retirement).

Mum’s intention was to open a SIPP, pay the £2800 into Virgin Money each year, receive tax rebate of £720, subsequently withdraw and put in either the Marcus or Vanguard ISA.  Is this technically possible (with either a Virgin PPP or Hargreaves Lansdown SIPP), or will they need to save in the SIPP until retirement?  Given timescales to retirement, would it be prudent to keep any money in cash inside SIPP wrapper?

Dazed_and_C0nfused

She would need to contribute the full £2,880 to get £720 tax relief.

As she is over past 55 she can take it all in one go if she wishes.  £900 would be TFLS and £2,700 taxable income.  The tax ultimately due on the £2,700 would depend on the profit from the BTL and whether she has applied for Marriage Allowance.

If she is intending to contribute and withdraw in a very short timescale then cash would be safest, investing could mean she doesn't have £3,600 to withdraw (could be more as well as less).

Once she has done this once she will never be able to contribute more than £4,000/year to a DC scheme.  Obviously not a problem if she isn't employed (or self employed) again.