Thoughts on best way to invest in sipp

[Deleted User]

1. Decide what your asset allocation should be. Based on the information you provided it should be  cautious as you can’t really afford to lose a large chunk of your investments.
2. Treat all your accounts as a single portfolio, ISA, SIPP, saving accounts, etc, 
3. Vanguard is a good platform for a portfolio your size. Stick to a single platform though. If you really want non-Vanguard products then pick something else.
4. VLS is designed to address all your needs in a simple product.  If you buy VLS and a bunch of other products then you are wasting the main advantage of VLS - simplicity. If you really want a bunch of products then you don’t need VLS as you can reproduce it with cheaper products. Can be Vanguards’s ETFs or tracker funds if you want to use their platform. 

5. You can lower the costs if you use ETFs rather than funds. Vanguard allows you to trade them for free and annual costs are lower. 
6. Personally, I wouldn’t bet anything on racy funds, unless its money you can afford to lose. 

Dazed_and_C0nfused

Marko125 said:

Dazed_and_C0nfused said:

You have told us lots about your ability to carry forward but nothing about whether you are actually able to use carry forward or even contribute more than £2,880 (net).

What pensionable earnings do you expect to have in this tax year and future tax years?

Until you know this carry forward is of no use.

How is it of no use im confused by what you are saying....

Currently out of work and hopefully start working after this tax year so future pension sipp payments of up to 40k a year but im only going to put 10k per annum into sipp.

DB pension contributions this year 8k as made redundant so now a deferred pension until 55yrs old.

Can utilise this years and last 3yrs of pension contributions which i didnt pay up to 40k so basically can add these years which equates to 70k

My original question was what are people's opinions on what sipp platform to use vanguard for its low fees and use passive trackers with flexible drawdown when take pension or another platform where i can invest in a range of other diverse funds etc.

Thats the only answer i was looking for rather than can i do this and that as i know from advice from an IFA it can be done in my situation.

What you appear to be telling us is that you have been made redundant in the current tax year and are currently unemployed.

That means that as things stand going forward you can only contribute £2,880 (net) each tax year from 6 April 2021.  If you find work that pays more than £3,600 in a tax year then that limit will increase.

But nothing you have said points to you being able to contribute a very large amount (>£40k) in this tax year.

Before considering what happened in previous tax years you need to look at your pensionable earnings in the current tax year.  

The simplest starting point would be what pay figure was shown on your P45?

AlanP_2

Marko125 said:

Dazed_and_C0nfused said:

You have told us lots about your ability to carry forward but nothing about whether you are actually able to use carry forward or even contribute more than £2,880 (net).

What pensionable earnings do you expect to have in this tax year and future tax years?

Until you know this carry forward is of no use.

How is it of no use im confused by what you are saying....

Currently out of work and hopefully start working after this tax year so future pension sipp payments of up to 40k a year but im only going to put 10k per annum into sipp.

DB pension contributions this year 8k as made redundant so now a deferred pension until 55yrs old.

Can utilise this years and last 3yrs of pension contributions which i didnt pay up to 40k so basically can add these years which equates to 70k

My original question was what are people's opinions on what sipp platform to use vanguard for its low fees and use passive trackers with flexible drawdown when take pension or another platform where i can invest in a range of other diverse funds etc.

Thats the only answer i was looking for rather than can i do this and that as i know from advice from an IFA it can be done in my situation.

I can appreciate your frustration that you are not getting a straight answer to the question you asked but the questions are relevant and prompted by the partial information you have given. The two entirely separate HMRC rules that apply to pension contributions can easily cause confusion and so posters are just trying to make sure you (and your IFA) have got it totally clear.

The gross maximum you can contribute to ANY pension in a year is limited by Relevant Income or £3600 whichever is greater. For you this sounds like earned salary + redundancy amount >£30k.

From this £VALUE you need to take off the £8k you have contributed to your DB scheme and that is the most you can contribute gross (so you would pay in 80% of that and HMRC would top it up).

Once you have passed that test you move on to Annual Allowance limit of £40k per year with the carry forward option, and the £8k you have contributed to your DB is irrelevant.

 If you have made a personal contribution to a DB scheme of £8k over a few months in this tax year I am suprised you have much, if any, of your £40k Annual Allowance unused as the AA charge for a DB scheme is based on the increase in benefits value and not the amount contributed. The same would apply to earlier years.

My wife pays ~£6.5k in DB contributions over 12 months and her AA charge is ~£25k a year.

Marko125

8k is total PIA which i recently recieved from pension trustees after i had finished so this is the total amount  from company contributions  plus my contributions for this tax year so my contributions were around 1.2k 

And yes i know my buisness should be my buisness only, and i understand how other people think about the question i asked, so in retrospect i only asked what peoples thoughts are about what platform and investments they would use and  not a overhaul of my pension and how it works. That part i have 100% clarity on,  its just the ideas of fellow investors on here who have better insight than myself  on platform and investment.
Thanks for your reply

Marko125

Dazed_and_C0nfused said:

Marko125 said:

Dazed_and_C0nfused said:

You have told us lots about your ability to carry forward but nothing about whether you are actually able to use carry forward or even contribute more than £2,880 (net).

What pensionable earnings do you expect to have in this tax year and future tax years?

Until you know this carry forward is of no use.

How is it of no use im confused by what you are saying....

Currently out of work and hopefully start working after this tax year so future pension sipp payments of up to 40k a year but im only going to put 10k per annum into sipp.

DB pension contributions this year 8k as made redundant so now a deferred pension until 55yrs old.

Can utilise this years and last 3yrs of pension contributions which i didnt pay up to 40k so basically can add these years which equates to 70k

My original question was what are people's opinions on what sipp platform to use vanguard for its low fees and use passive trackers with flexible drawdown when take pension or another platform where i can invest in a range of other diverse funds etc.

Thats the only answer i was looking for rather than can i do this and that as i know from advice from an IFA it can be done in my situation.

What you appear to be telling us is that you have been made redundant in the current tax year and are currently unemployed.

That means that as things stand going forward you can only contribute £2,880 (net) each tax year from 6 April 2021.  If you find work that pays more than £3,600 in a tax year then that limit will increase.

But nothing you have said points to you being able to contribute a very large amount (>£40k) in this tax year.

Before considering what happened in previous tax years you need to look at your pensionable earnings in the current tax year.  

The simplest starting point would be what pay figure was shown on your P45?

I understand all about pensions and contributions employed or not employed, and what carry forward on my PIA this year and unused over 3yrs so this is not my question.....

My question was what would people choose a cheaper sipp platform with passive index trackers or a more expensive platform with wider range of investments.

So its simple really and no real need to go into all the specifics of where the money is coming from to be invested in a sipp. Or am i wrong in saying this as i can't see the benefit of asking how or where the money is coming from but just how other people's ideas are compared to mine thanks...

Dazed_and_C0nfused

I don't think anyone is particularly bothered about where the money is coming from.  The question is are you actually able, within the relevant rules, to contribute £45k (or maybe £56.25k) in the current tax year.

Based on what you have posted you cannot as things stand contribute more than £2,880 in future years it is just the current year which is not clear.

However as you say this isn't what you originally asked about so I'll butt out now.

AlanP_2

Ok, so as Mordko suggested in his Point 1 above - decide on your asset allocation.

Once that is done you can look for investments that will deliver what you want. They could be multi-asset like VLS and it's competitors / Passive Trackers / Active Funds / ETFs / Individual Shares or a combination of these to achieve your objective.

Once that is done choose the most appropriate platform to buy the chosen investments.

 

garmeg

Dazed_and_C0nfused said:

I don't think anyone is particularly bothered about where the money is coming from.  The question is are you actually able, within the relevant rules, to contribute £45k (or maybe £56.25k) in the current tax year.

Based on what you have posted you cannot as things stand contribute more than £2,880 in future years it is just the current year which is not clear.

However as you say this isn't what you originally asked about so I'll butt out now.

"No answer came the stern reply"

Marko125

Dazed_and_C0nfused said:

I don't think anyone is particularly bothered about where the money is coming from.  The question is are you actually able, within the relevant rules, to contribute £45k (or maybe £56.25k) in the current tax year.

Based on what you have posted you cannot as things stand contribute more than £2,880 in future years it is just the current year which is not clear.

However as you say this isn't what you originally asked about so I'll butt out now.

I appreciate your help but for sure i think you misunderstood the basis of the question.....the other part of this works like this....
I have total earnings of 95k for this tax year after my 30k tax free from redundancy.
I've paid 30k tax on this but had a refund from hmrc so for this year my earnings are 95k making is 45k above the 20% tax braket ( 50k )
This means i can put in as much as i earn in this tax year and yes will be tax penalties involved and that means i can use carry over for any unused over this year and previous 3yrs and if i don't work again then only the £2880 in the future i understand all of this i just wanted opinions on best investments and platforms to maximise sipp..

Linton

There is no such things as "best investments", or "best platform".  What you should be looking for is most appropriate investments and platforms.  And you cant decide on platforms untril you have decided on investments. And you cant decide on investments until.......

I would agree very much with most of Mordko's reply.  However it starts too late in the process.  Where you should start is what do you need from your investments? Money and timescale.  When you know what you need you can then come up with a strategy that maximises the chance of getting there.  It is no good just saying maximum return because the way to get very high returns is to take high risks that the money wont actually be there when you need it.

What you have told us is that you want to put £45K now into investments and add £10K/year to get £100K.  If that is the case why are you investing? Especially as I assume you are planning to get another job and work until 55 and then retire.  6 years is a pretty short time for large scale investing, what happens if there is a 50% crash when you are 54? . You will get to £100K at 55 just saving money in a bank account with no risk whatsoever.

I suggest you work out what you really need when and then put sufficient into safer investments to ensure that you really can retire when you want to.  Anything beyond that can be invested at more risk and hopefully higher return.