SIPP advice for a non tax payer over 55.

RG2015

Can someone direct me to a simple guide for opening and running a (cash) SIPP for my wife.

I understand she can pay in £2,880 per tax year and have the £720 cash relief added by the Government. Her only current income is from interest on savings which is well below the personal tax allowance. 

molerat

What does she want to do when it is open, does she simply want to withdraw the £3600 as income each year or is it for the longer term ?

cloud_dog

HL used to be a favourite for this due to them not applying a platform fee on cash held in the account.

Is the desire to contribute and then withdraw?

If so, you may want to double check any rules for minimum length of time and any minimum residual money left in the account.

If it is short term and for the money to remain in the account, you could invest in one of the many money market funds, such as Royal London Short Term Money Market fund.

Albermarle

RG2015 said:

Can someone direct me to a simple guide for opening and running a (cash) SIPP for my wife.

I understand she can pay in £2,880 per tax year and have the £720 cash relief added by the Government. Her only current income is from interest on savings which is well below the personal tax allowance. 

Hargreaves Lansdown is often mentioned as a SIPP provider for this purpose. I think the reason is that they have a reputation for good service and higher fees. The latter hardly makes any difference for such small amounts ( it is charged as a %) but the good service helps. Also they have no minimum charge.

Your wife can just open a HL Sipp here and add the £2880 . Simple as that .

Self-Invested Personal Pension | Hargreaves Lansdown (hl.co.uk)

RG2015

Albermarle said:

RG2015 said:

Can someone direct me to a simple guide for opening and running a (cash) SIPP for my wife.

I understand she can pay in £2,880 per tax year and have the £720 cash relief added by the Government. Her only current income is from interest on savings which is well below the personal tax allowance. 

Hargreaves Lansdown is often mentioned as a SIPP provider for this purpose. I think the reason is that they have a reputation for good service and higher fees. The latter hardly makes any difference for such small amounts ( it is charged as a %) but the good service helps. Also they have no minimum charge.

Your wife can just open a HL Sipp here and add the £2880 . Simple as that .

Self-Invested Personal Pension | Hargreaves Lansdown (hl.co.uk)

Is it as simple as adding £2,880 each year and the government adding £720?

What are the rules for withdrawing cash?

RG2015

molerat said:

What does she want to do when it is open, does she simply want to withdraw the £3600 as income each year or is it for the longer term ?

The initial thought was to deposit £2,880 and withdraw £3,600 each year. However I cannot see anywhere where it says how long the cash needs be held in the SIPP before it can be withdrawn?

As yet we haven't considered the longer term possibilities of keeping money there to provide a pension income, but this could be an option.

For information, she is paying voluntary monthly NI contributions scheduled to reach the full state pension requirement when she reaches state pension age.

We are currently living on my company pension and state pension and my company pension would pay her a widows pension of 50%.

Pat38493

As far as I understand there is no technical limit on how long the money needs to stay there before you take it out, but you may find that you have to wait up to 2 months for the tax credits to be applied as a lot of providers only add the tax amount to the account after they get the money from HMRC.

molerat

For the £2880 in £3600 out it doesn't need to stay in the SIPP for any length of time.  Once added the tax will be credited according to the timescale indicated by the provider but anything in the account can be withdrawn immediately.  The only thing that needs managing is the effect on withdrawals of the tax codes allocated and HL needing a minimum of £50 kept in the account. For the first withdrawal you need to provide ID and postal bank statements but once that is done it just becomes an annual routine taking a few minutes.   HL currently pay 2.25% on cash held.

Stubod

..I opened a HL SIPP for both myself and OH acouple of month ago.

I just checked out some of their "standard" SIPP platforms and went for one that seemed to have a reasonable track record. Very (very) easy to do as their website is a breeze. Just use your debit card to deposit the cash, and then select the platform you want and about 6 weeks later the gov. kindly donated the £700 odd quid which I opted to leave in the investments I had chosen.

As a bit of fun we both went for different funds...

toomuchinfo

Well, this looks interesting. Do you mean that I could put £2880 in a SIPP, and the Gov.would put in £700? I could then leave it in the SIPP and do the same the following year or I could take it all out again and still do the same the following year?

Does it matter that I’ll start getting my State Pension in July, I’m currently an unpaid carer getting Carers Allowance (which finishes in July when my pension starts)

xylophone

Does it matter that I’ll start getting my State Pension in July, I’m currently an unpaid carer getting Carers Allowance (which finishes in July when my pension starts)

You are a person aged under 75 who has no "relevant earnings".

This does not prevent your contributing to a pension but it does limit the amount you can contribute and receive tax relief.

https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm044100

covers the "basic amount" which is £3,600 gross, £2880 net.

You would open a personal pension, contribute up to £2880  per tax year and the provider would claim up to £720 in tax relief and add it to your pot.

Receiving a state pension does not prevent you from contributing to a pension.

Be aware though that pension income from whatever source does not count as relevant earnings so that if pension income was a person's only income, he  would still be limited to the "basic amount" as defined above.