Any unemployed contributing to a SIPP?

Frank99

Anyone started a Self Invested Personal Pension whist on JSA or UC.
My nephew wants to do this as he is a temp and does a lot of zero hour contracts, he does not think he will ever manage to get permanent work but feels he wants to safeguard his future with a pension such as a sipp to ensure he has at least something in retirement.
If you just contribute to a sipp for instance whist on benefits and continue when your back in a job does this affect benefits if you don't touch it until retirement, what do you tell the jobcentre about the sipp? I have never known people contribute to something like this whilst on the dole although i understand from googling that is seems to be legal as long as you don't withdraw whilst on benefits obviously.
Anybody been doing this or heard of it because i'm not sure that on a JSA budget of £72 a week he could even afford a minimum payment anyway but he wants to risk it.

calcotti

Money in a pension pot is ignored as capital while claiming benefits.
Capital over £6000 reduces means tested benefits.
If they currently have capital and pay it into a pension pot that is likely to be treated as deprivation of capital and they will be treated as if they still have it.
The question of whether or not someone can afford to pay into a SIPP while on benefits is a different matter altogether!

Frank99

calcotti said:

Money in a pension pot is ignored as capital while claiming benefits.
Capital over £6000 reduces means tested benefits.
If they currently have capital and pay it into a pension pot that is likely to be treated as deprivation of capital and they will be treated as if they still have it.
The question of whether or not someone can afford to pay into a SIPP while on benefits is a different matter altogether!

Yes this does make sense, he hardly has any money as he is terrible at saving but was hoping to start with about £5 a week going into a sipp to start from scratch but i think the minimum payments are around £100 a month which would be almost impossible for someone on JSA. I can understand how any spare cash would seem like deprivation of capital especially if he tries to start paying in while on the dole, that would would give the wrong impression to the labour exchange.

MovingForwards

Does he have any pensions elsewhere? even as a temp he should have been auto enrolled.

Whilst straying more away from the benefits side of your query, as Calcotti has covered it, paying a small amount into a SIPP can be done.

Prior to opening it I weighed up the benefits of moving some old company pensions into it, just to make a collective amount and give myself a fighting chance of them growing more together. Also the fees were cheaper in my SIPP, than staying with the original company.
- I only had what would be classed as small pots to most people (£11k in total at the time).

Before some of my old pensions were consolidated into the SIPP, I did make little £5 and £10 payments into it. I do work and don't claim benefits.

While not strictly 'allowed' by the provider, I'm not the only one who does it. Occasionally it does pop up on the pension board.

The downside to your nephew doing it, if he is a lot older than I'm guessing and has no other pensions, is potentially he could miss out on some top ups and other 'perks'. However, your nephew may also be young enough to land a permanent role in a few years, join the company pension and make up for the years to date.

Main thing he needs to do is check his state pension and make sure he's on track for receiving the full one. Make sure he reads all of it and not the headline!