Pensions transfer, SIPP & ISA

RobieTheRobot

Hi

I need some help in terms of future pension access. The pension are not big and I am now effectively retired as unable to find a job at 62. I also have S&S ISA separately to the two pensions. Treat me as totally stupid who doesn't know anything and therefore provide your own thoughts on this please.

Pension 1 = £36,000
Pension 2 - £136,000
ISA = £130,000

1. So I was thinking of transferring out the two pensions and put it in to a single SIPP. Then start withdrawing money as my pension. In terms of SIPP provider, II seem to have the least cost in managing the SIPP.

2. What can I do with my ISA (to which I have *not* contributed for last two years)? Can I turn it into a pension or add to my SIPP? Not sure what I am asking but trying to make do the best I can with my ISA.

3. Can I transfer my some or all of my ISA contribution to my wife? This may be totally stupid question.

4. What is my best route to get the best pension monthly? 

Thanks

Albermarle

RobieTheRobot said:

Hi

I need some help in terms of future pension access. The pension are not big and I am now effectively retired as unable to find a job at 62. I also have S&S ISA separately to the two pensions. Treat me as totally stupid who doesn't know anything and therefore provide your own thoughts on this please.

Pension 1 = £36,000
Pension 2 - £136,000
ISA = £130,000

1. So I was thinking of transferring out the two pensions and put it in to a single SIPP. Then start withdrawing money as my pension. In terms of SIPP provider, II seem to have the least cost in managing the SIPP. The obvious question is what is wrong with the two pensions you have? Maybe you could transfer one into the other? A caveat is that if they are old pensions, you may well be better to transfer to a more modern provider like II, or similar.
Looking at the bigger picture, how the pensions are invested, is much more important than the platform you use.

2. What can I do with my ISA (to which I have *not* contributed for last two years)? Can I turn it into a pension or add to my SIPP? No, but as a non earner you can add £2880 to a pension each year and £720 of tax reloef will be added. Not sure what I am asking but trying to make do the best I can with my ISA. Again, how it is invested is important .

3. Can I transfer my some or all of my ISA contribution to my wife? This may be totally stupid question. Not clear what benefit, if any , this would bring, but you can not do it anyway.

4. What is my best route to get the best pension monthly? Ask the pension provider to arrange it.

Thanks

See comments in bold above. You would probably benefit from a free chat with Pensionwise.
Pension Wise: free pension guidance | MoneyHelper

Will you and your wife be both getting  full state pensions?

Exodi

Albermarle covers most points above.

RobieTheRobot said:

2. What can I do with my ISA (to which I have *not* contributed for last two years)? Can I turn it into a pension or add to my SIPP? Not sure what I am asking but trying to make do the best I can with my ISA.

This feels very similar to the situation with money/gift cards (which I'll never understand - a story for another day I'm sure!).

Look at it like this:

You have money in an ISA that you can withdraw at any time, penalty-free.

You want to put money into a SIPP, that may then be taxed when it is withdrawn.

My S&S ISA & SIPP are invested in exactly the same things.

(Sorry if you're talking about a Cash ISA, but I think these are relatively rare?)

xylophone

Have you obtained a state pension forecast to help with future planning?

https://www.gov.uk/check-state-pension

2. What can I do with my ISA (to which I have *not* contributed for last two years)

Is this a stocks and shares ISA? Or cash?

You could take a tax free income from ISA either by way of dividends or interest.

Even though you have no relevant earnings, while under age 75, you can make a net contribution of up to £2880 to a personal pension and receive tax relief of £720.

If the II SIPP offers the features that suit you in terms of flexibility etc and your older plans don't, then a transfer could make life much easier in terms of pension access.

You will need to decide how you  will access your pensions - an interview with Pension Wise could help.

https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise

LHW99

Does your wife have any pension? Its usually best to plan things by considering what you both have.

Have you both checked what state pension you will get? One thing you could do with some money from your SIPP may be to top up any gaps in your / her NI years (if there are any) as you usually make back the cost in 3 or 4 years.

af1963

From now until your state pension starts, assuming you have no other income, you could take up to £16760 each year from the SIPPs without paying any tax on it ( £4190 is the 25% tax free lump sum, and £12570 is your annual allowance)

Anything above this amount from the SIPP, you'd pay tax on it in the usual way.

You can spend as much as you like from the ISA - no tax due.  So if you need more than £16760, one way to get it is to then spend part of the ISA instead of taking more pension and paying tax on it.

As others say above - knowing what you and your wife have coming as state pension will help to plan ahead. And if you don't both already have entitlement to the full state pension, you may find it's worthwhile to use some of the ISA cash to buy extra years of National Insurance. 

You can also both use the trick about contributing to the SIPP to gain a little from tax relief.  (If you end up withdrawing the extra cash from the SIPP at a time when you will be taxed on it, you'd lose most of the extra £720 tax relief but still end up a bit better off because you can take part of the SIPP tax free.). Each of you is treated and taxed individually.

You can't transfer ISA or SIPP to your wife but nothing stops you giving her money which she then contributes herself.

RobieTheRobot

Albermarle said:

RobieTheRobot said:

Hi

I need some help in terms of future pension access. The pension are not big and I am now effectively retired as unable to find a job at 62. I also have S&S ISA separately to the two pensions. Treat me as totally stupid who doesn't know anything and therefore provide your own thoughts on this please.

Pension 1 = £36,000
Pension 2 - £136,000
ISA = £130,000

1. So I was thinking of transferring out the two pensions and put it in to a single SIPP. Then start withdrawing money as my pension. In terms of SIPP provider, II seem to have the least cost in managing the SIPP. The obvious question is what is wrong with the two pensions you have? Maybe you could transfer one into the other? A caveat is that if they are old pensions, you may well be better to transfer to a more modern provider like II, or similar.
Looking at the bigger picture, how the pensions are invested, is much more important than the platform you use.

2. What can I do with my ISA (to which I have *not* contributed for last two years)? Can I turn it into a pension or add to my SIPP? No, but as a non earner you can add £2880 to a pension each year and £720 of tax reloef will be added. Not sure what I am asking but trying to make do the best I can with my ISA. Again, how it is invested is important .

3. Can I transfer my some or all of my ISA contribution to my wife? This may be totally stupid question. Not clear what benefit, if any , this would bring, but you can not do it anyway.

4. What is my best route to get the best pension monthly? Ask the pension provider to arrange it.

Thanks

See comments in bold above. You would probably benefit from a free chat with Pensionwise.
Pension Wise: free pension guidance | MoneyHelper

Will you and your wife be both getting  full state pensions?

Firstly, thank for the quick response & very useful comments. I will definitely speak with Pensionwise.

Yes, perhaps transferring small 30k pension to the slightly bigger one makes sense. 

1. The charges for the 2nd pension (which is about 130k) are quite high IMHO. That is the reason for moving to another pension provider. But, as you say I will look more into how they are/have been growing my money for all these years, i.e. how/where it is invested. Then decide what to do with it.

3. I understand. ISA remains ISA.

RobieTheRobot

xylophone said:

Have you obtained a state pension forecast to help with future planning?

https://www.gov.uk/check-state-pension

2. What can I do with my ISA (to which I have *not* contributed for last two years)

Is this a stocks and shares ISA? Or cash?

You could take a tax free income from ISA either by way of dividends or interest.

Even though you have no relevant earnings, while under age 75, you can make a net contribution of up to £2880 to a personal pension and receive tax relief of £720.

If the II SIPP offers the features that suit you in terms of flexibility etc and your older plans don't, then a transfer could make life much easier in terms of pension access.

You will need to decide how you  will access your pensions - an interview with Pension Wise could help.

https://www.moneyhelper.org.uk/en/pensions-and-retirement/pension-wise

Firstly, thank for the quick response & very useful comments. I will definitely speak with Pensionwise.

Is this a stocks and shares ISA? Or cash?
It's a S&S ISA.  

Even though you have no relevant earnings, while under age 75, you can make a net contribution of up to £2880 to a personal pension and receive tax relief of £720.

Interesting. Let's see if I understand this correctly. I can money out of my S&S each year (up to £2280) and put that in my pension! Please correct me if I am wrong.

RobieTheRobot

LHW99 said:

Does your wife have any pension? Its usually best to plan things by considering what you both have.

Have you both checked what state pension you will get? One thing you could do with some money from your SIPP may be to top up any gaps in your / her NI years (if there are any) as you usually make back the cost in 3 or 4 years.

Thanks for your comments.

Sadly, she doesn't have much (extremely little pension) for when she worked. Due to ill health she hasn't been working for past 5 years and before that it was intermittent part-time contracting work. 

I will check up on NI contributions for both of us.

Albermarle

nteresting. Let's see if I understand this correctly. I can money out of my S&S each year (up to £2280) and put that in my pension! Please correct me if I am wrong.

The source of the money is irrelevant, it can come from anywhere, and it is £2880, not £2280 .

RobieTheRobot

af1963 said:

From now until your state pension starts, assuming you have no other income, you could take up to £16760 each year from the SIPPs without paying any tax on it ( £4190 is the 25% tax free lump sum, and £12570 is your annual allowance)

Anything above this amount from the SIPP, you'd pay tax on it in the usual way.

You can spend as much as you like from the ISA - no tax due.  So if you need more than £16760, one way to get it is to then spend part of the ISA instead of taking more pension and paying tax on it.

As others say above - knowing what you and your wife have coming as state pension will help to plan ahead. And if you don't both already have entitlement to the full state pension, you may find it's worthwhile to use some of the ISA cash to buy extra years of National Insurance. 

You can also both use the trick about contributing to the SIPP to gain a little from tax relief.  (If you end up withdrawing the extra cash from the SIPP at a time when you will be taxed on it, you'd lose most of the extra £720 tax relief but still end up a bit better off because you can take part of the SIPP tax free.). Each of you is treated and taxed individually.

You can't transfer ISA or SIPP to your wife but nothing stops you giving her money which she then contributes herself.

Thank you very much. Very clear reply that even I can understand.

You say:
From now until your state pension starts, assuming you have no other income, you could take up to £16760 each year from the SIPPs without paying any tax on it ( £4190 is the 25% tax free lump sum, and £12570 is your annual allowance)

I thought I could take the 25% lump sum just once when I start my pension. How did you get to the figure of £4190 *each* year? 

I am definitely checking up on what we both will get for state pension today.

You can also both use the trick about contributing to the SIPP to gain a little from tax relief.  (If you end up withdrawing the extra cash from the SIPP at a time when you will be taxed on it, you'd lose most of the extra £720 tax relief but still end up a bit better off because you can take part of the SIPP tax free.). Each of you is treated and taxed individually.

Still trying to understand this extra tax relief on my contributions. I presume this would be from the ISA that I withdraw and put in my pension each year!