Opening a SIPP after retirement

Umiamz

A year ago I took early retirement and opted to receive my full lump sum and monthly pension from USS. I'm wondering if it's possible to open a SIPP now that I'm no longer working to obtain a bit of tax relief on my investment contributions.

I've read a few articles on various investment platform websites but I'm still confused over whether I can still open a SIPP and what limits I would face in terms of contributions and tax relief. I'm a basic rate tax payer.

zagfles

Yes until you are 75 you can put £2880 into a SIPP and it will be grossed up to £3600. There's a long thread on it here. 

MK62

Yes you can open a SIPP. As a non-earner, you can currently put up to £2880 into it each tax year and HMRC will top that up to £3600 each tax year. You can do this until you are 75 (when the tax relief stops, so it then becomes a bit pointless tbh)

Dazed_and_C0nfused

What have you read that suggests you can't do it??

Based on what you've posted there is no reason you couldn't open a SIPP and contribute £2,880.  Which will have £720 tax relief added.

If you have no earnings £3,600 gross is the most you can only contribute per tax year.

I'm assuming you are UK resident and under 75.

Umiamz

Thanks for the replies. I'd read some forums where there was conflicting information and also some SIPP provider websites that didn't say that you couldn't if you were no longer working but didn't say you could, either.

Regardless, thanks for the confirmation that I can go ahead (and, yes, I'm under 75 and a UK resident).

Albermarle

Paying £2880 into pension when retired — MoneySavingExpert Forum

No need to read all of it as it is rather long .

The choice of SIPP provider is quite important , as some have a minimum charge that penalises smaller savers . Also some have better customer service than others for small investors.

nigelbb

Albermarle said:

Paying £2880 into pension when retired — MoneySavingExpert Forum

No need to read all of it as it is rather long .

The choice of SIPP provider is quite important , as some have a minimum charge that penalises smaller savers . Also some have better customer service than others for small investors.

Hargreaves Lansdowne have no charge for accounts held in cash.

RetSol

Hargreaves Lansdowne have no charge for accounts held in cash.

Ditto AJ Bell. 

jimi_man

A lot depends on whether you’re a tax payer or not. If your USS pension exceeds the tax threshold then when you take out the £3600 you’ll have to pay 20% tax on 75% of it, so it’s not such a good deal. You end up with 6.25% extra - still not too bad but not as good. 

Umiamz

jimi_man said:

A lot depends on whether you’re a tax payer or not. If your USS pension exceeds the tax threshold then when you take out the £3600 you’ll have to pay 20% tax on 75% of it, so it’s not such a good deal. You end up with 6.25% extra - still not too bad but not as good. 

I’m not planning to pay in £2880 and withdraw £3600 every year, I’m actually going to invest it and leave it there. Having read some of the thread mentioned above it seems that most are just after the extra cash each year.

I’ve gone with Vanguard for the low platform fee.

Albermarle

Umiamz said:

jimi_man said:

A lot depends on whether you’re a tax payer or not. If your USS pension exceeds the tax threshold then when you take out the £3600 you’ll have to pay 20% tax on 75% of it, so it’s not such a good deal. You end up with 6.25% extra - still not too bad but not as good. 

I’m not planning to pay in £2880 and withdraw £3600 every year, I’m actually going to invest it and leave it there. Having read some of the thread mentioned above it seems that most are just after the extra cash each year.

I’ve gone with Vanguard for the low platform fee.

Even if you leave it there for a few years , when you do take it out , the same situation will apply . 25% will be tax free and 75% taxable . Although you have currently £12570 personal tax allowance this is probably already used up by your USS pension and the state pension when it comes along . So for each £2880 you add you will only gain £180 taxwise ( = 6.25% as already mentioned ) 

You can leave a pension as an inheritance , which has the added advantage that it will not be included in your estate for inheritance tax purposes. In any case you should inform Vanguard of who should be the beneficiary of any pension pot left when you die.