Low or no cost SIPP platforms to hold cash?

cloud_dog

Using UFPLS, you could withdraw £16760pa (current 22/23 tax rules) without paying any income tax (assuming no other taxable income).

plumb1_2

Albermarle said 

If you get 20% tax relief on the way in and the max tax you pay on the way out is 15% ( 25% tax free and 75% at 20%) , the tax benefit is 6.25%. So over one or two years you would be better off than keeping it in a savings account outside the pensions. After that it would switch around.
Unless as Mallygirl says you can take the 75% without paying tax ( or some of it) then the tax benefit is higher.

hi could you explain why after 2yrs it would switch around please.

Albermarle

plumb1_2 said:

Albermarle said 

If you get 20% tax relief on the way in and the max tax you pay on the way out is 15% ( 25% tax free and 75% at 20%) , the tax benefit is 6.25%. So over one or two years you would be better off than keeping it in a savings account outside the pensions. After that it would switch around.
Unless as Mallygirl says you can take the 75% without paying tax ( or some of it) then the tax benefit is higher.

hi could you explain why after 2yrs it would switch around please.

Because if your cash in the SIPP was not earning any interest, and you could earn say 2.5% in a savings account outside the SIPP, then after approx 2.5 years, you would have gained about 6.25% either way. After 2.5 years you would be gaining more in the savings account than the 6.25% tax gain in the SIPP. 

isayhello

eastcorkram said:

So, as an example, if I was to stop work next April , I could then drawdown the cash from that SIPP, at say £12500 per year for two years. Supplemented as required by using savings. Presume I'd pay no tax for those two years?

Then, reach state pension age, start drawdown of the invested SIPP, and start small DB scheme, all at the same time.

so once you reach state pension age, anything you drawdown over £12,500 would be taxed at 20%? what is a DB scheme?

eastcorkram

isayhello said:

eastcorkram said:

So, as an example, if I was to stop work next April , I could then drawdown the cash from that SIPP, at say £12500 per year for two years. Supplemented as required by using savings. Presume I'd pay no tax for those two years?

Then, reach state pension age, start drawdown of the invested SIPP, and start small DB scheme, all at the same time.

so once you reach state pension age, anything you drawdown over £12,500 would be taxed at 20%? what is a DB scheme?

I guess so, but by then, the cash in the SIPP I've been talking about, would be all gone. 
DB = defined benefit.

isayhello

eastcorkram said:

I guess so, but by then, the cash in the SIPP I've been talking about, would be all gone. 
DB = defined benefit.

Ok, that's interesting so you would use the SIPP to help you retire early and then live on the state pension only? I thought DB schemes were old schemes run by employers that are being phased out, how would that apply here?

eastcorkram

isayhello said:

eastcorkram said:

I guess so, but by then, the cash in the SIPP I've been talking about, would be all gone. 
DB = defined benefit.

Ok, that's interesting so you would use the SIPP to help you retire early and then live on the state pension only? I thought DB schemes were old schemes run by employers that are being phased out, how would that apply here?

isayhello said:

eastcorkram said:

I guess so, but by then, the cash in the SIPP I've been talking about, would be all gone. 
DB = defined benefit.

Ok, that's interesting so you would use the SIPP to help you retire early and then live on the state pension only? I thought DB schemes were old schemes run by employers that are being phased out, how would that apply here?

No, not the state pension only. The state pension, plus a DB pension, which , yes is from a long time ago, plus my current workplace pension. Not sure how else I can explain it! 

isayhello

That's clear thanks, sorry you'd said you'd be starting a small DB scheme and I thought that meant you were setting up a new one which confused me.

isayhello

plumb1_2 said:

I opened a vanguard sipp on 29/01/22 and put 20k in, plus I got 5k off Rishi.
Left it as cash, today it’s £38.55 up.
Fees so far £6.14 &£9.35, so someone clever than me( that’s easy) can work out the interest.

And my isa is only down 4.9%, 7% 2 weeks ago

what are the 2 fees for @plumb1_2

plumb1_2

I think all vanguard products have a on going fees paid every 3 months I think.
Although the little interest you receive for having it in cash is more than the fee, so it is technically growing.
Since my last post it’s gone up now to £59.80 as I’ve just checked this morning.
Yes it doesn’t keep up with inflation, but I intended to withdraw it within 2 yrs

Plus my isa is only down 2.2% so good news for the start of the week.