SIPP questions

Albermarle

 I will still be a higher rate payer, we just feel like, for the time being, we need access to liquid cash (i.e S&S ISA, cash ISA) should we need to but perhaps move into paying more into SIPP/work pension as we get older. 

Although higher rate tax relief is very generous, it is understandable that you do not want to tie all your money up at your age. Be aware however that pension rules can change, and there is currently some chatter about how generous some pension  rules are for the 'better off', higher rate relief being one of them. Although this chatter is nothing new, something may happen one day.

There's so many options (ISA, SIPP, work pension), each with its own benefits.

You should be clear that in reality a SIPP and a workplace DC pension are very similar. ( If the workplace pension is a Defined Benefit pension then that is different)

They are both DC ( Defined Contribution ) pensions, and the rules governing them both are exactly the same. In practice the only real difference is that they will offer a different choice of funds/investments. As most people with pension pots rarely actually change their investments ( or even know their pension is invested) then this difference has no effect.  Charges can be different but both can vary a lot in this respect.

The main difference that we see from posters to this forum is that workplace pensions are seen as boring, and there is a suspicion that as they are linked to the employer then probably they are a rip off.

On the other hand SIPP's are well marketed and seen as more sexy. There is an assumption that a SIPP will be cheaper, but in fact in many cases the opposite is true. If the workplace contributions are made via salary sacrifice then this is a distinct advantage.

LHW99

mighty2022 said:

Just make sure you understand the full implications of this, in particular any potential impact on your wife's State Pension as she would lose credits if you opted out completely rather than claiming Child Benefit but turning down just the actual payments.

Yes of course, I meant opting out of the actual payments. I would still 'register' for CB

If you will work and your wife will stay at home to look after children, she should claim child benefit (and refuse the payments) because she then gets the credits. You will pay NI while you work.

If you claim the child benefit, but continue working, her NI record will be reduced because you can't transfer credits from one person to the other AFAIK

mighty2022

Albermarle said:

 I will still be a higher rate payer, we just feel like, for the time being, we need access to liquid cash (i.e S&S ISA, cash ISA) should we need to but perhaps move into paying more into SIPP/work pension as we get older. 

Although higher rate tax relief is very generous, it is understandable that you do not want to tie all your money up at your age. Be aware however that pension rules can change, and there is currently some chatter about how generous some pension  rules are for the 'better off', higher rate relief being one of them. Although this chatter is nothing new, something may happen one day.

Yeah, that's exactly the feeling that we don't want to tie much of our money into pension yet.

Can I ask, for those of you are currently contributing into SIPP or Pension, at what age did you start putting money in SIPP and roughly what percentage of your pay it was? Or if you have/had a company pension, at what age did you up your contribution? 

Albermarle

mighty2022 said:

Albermarle said:

 I will still be a higher rate payer, we just feel like, for the time being, we need access to liquid cash (i.e S&S ISA, cash ISA) should we need to but perhaps move into paying more into SIPP/work pension as we get older. 

Although higher rate tax relief is very generous, it is understandable that you do not want to tie all your money up at your age. Be aware however that pension rules can change, and there is currently some chatter about how generous some pension  rules are for the 'better off', higher rate relief being one of them. Although this chatter is nothing new, something may happen one day.

Yeah, that's exactly the feeling that we don't want to tie much of our money into pension yet.

Can I ask, for those of you are currently contributing into SIPP or Pension, at what age did you start putting money in SIPP and roughly what percentage of your pay it was? Or if you have/had a company pension, at what age did you up your contribution? 

For the first 15 years of employment I had a non contributory defined benefit pension scheme. A so called Platinum plated scheme ! 
After that I started with a poor DC scheme at age 40 . 4.5% each from employer and employee ( I got a big salary increase to compensate). After some lobbying I got it increased to 7.5% from employer and 6% from me. Later I increased my % to 10.
New job ( 50 years old) - employer paid 9% , I paid 11% .
From around 55 - paid in occasional lump sums on top, so overall around 40% of salary for 5 years.
To be fair I was quite well paid and I wanted to maximise higher rate tax releif in my final years at work.