SIPP for the Wife advice

1980ds

Hello, 

So we’re looking at starting a SIPP for the wife outside of the current pension she puts into.

She earns 24k part time doing 32 hours per week and puts in 10% currently to her employer pension (5%\5%).  Questions are:

1) as she contributes £2,400 gross currently is the most we can put into a SIPP the differential down to NMW, I.e 24,000 - 2,400 - (10.42 x 32 x 52) = 4,261 (gross therefore 3,408 net)?

 2) am I able to transfer this money into her SIPP or does it have to physically be transferred via my wife’s bank account?

3) what would be a decent SIPP provider in this instance? Ideally one with low fees and low/medium risk attached.

4) anything else to consider?

Ideally we’re looking to build a pot of 100-150k by retirement to ensure she utilises the full tax free personal allowance.

thanks for your time and appreciate any comments!!

Dazed_and_C0nfused

1.  NMW is only a factor for salary sacrifice, she would be making relief at source (RAS) contributions to the SIPP.  How much do you think her P60 will show her taxable pay as come April 2024?

2.  You can probably do it but check with whichever provider you/she choose.

3.  Mainstream SIPP providers don't really have any risk.  It's the investments within the SIPP that have the risk element.

4.  How the money will be invested will be a factor when selecting a provider as that can impact the charges.

MK62

In this instance, the NMW/NLW aren't relevant.......your wife can contribute, gross, up to her earnings......£24,000 (unless she is subject to the MPAA, which only applies if she has accessed taxable cash from any of her DC pensions).
So that's £24000-£2400=£21600 gross, or £17280 net.

You can pay it, but it counts as your wife's contribution, and she gets the tax relief.....or you can transfer money to your wife's account and let the SIPP provider collect it from there.....up to you really.

Any of the mainstream SIPP providers would be fine tbh........if starting from zero or a low level, the percentage fee based platforms are probably the cheapest.......after a few years, once the balance has increased, that starts to  change in favour of the fixed fee platforms......just transfer then. In your shoes I think you could do worse than Vanguard and either a global index tracker fund or funds, or a Lifestrategy fund.......then re-evaluate in a few years once the balance has grown.......but there are plenty of alternatives. The fees can sometimes be somwhat less than straightforward to work out, and sometimes depend on how you invest and what you invest in......so you should perhaps decide your strategy first.

Albermarle

Ideally we’re looking to build a pot of 100-150k by retirement to ensure she utilises the full tax free personal allowance.

Firstly to say this is good planning. Just remember the state pension is taxable so she will be only fully able to utilise the personal allowance from this SIPP, if she retires before then, Presumably she is on target for a full state pension.

 what would be a decent SIPP provider in this instance? Ideally one with low fees and low/medium risk attached.

You might well find that her current employer pension is perfectly adequate, and no need to open up a new separate pension. A SIPP can be more complicated to operate for an inexperienced investor. She could either increase the monthly contributions, or pay in ad hoc lump sums. She would just have to check with her employer and pension provider what was possible. If you name the pension provider, then you might get some useful feedback.

As said, whether it is the employer pension or a separate pension, it is the investments within the pension that determine the risk and potential growth.