Am I on the right lines - new SIPP

itsmecathy

Hi Draggoch, Thanks for the question - I have been mulling starting LGPS AVCs but was thinking that building a pension for my OH would be better to make use of his personal allowance once in drawdown (I got advice on this from here a while ago but we've done nothing about it till now, choosing to pay off mortgage and build savings for our kids university instead. Maybe not wisest financially but I feel much better having done it). 

Also the only provider for my LGPS is prudential and I wasn't sure what investment I would go for. 

I get an automatic lump-sum already (in scheme since 1995) so would AVCs still be a good bet?

Any thoughts most welcome. Thank you.

Albermarle

itsmecathy said:

Thanks SVaz, I just found it on AJBell and saw that. Right, tomorrow I'm going to bite the bullet and get my OH to open a SIPP.

All the comments so far are very sensible.
However if it was me, I would invest some of the £500 a month to begin with ay least, and not just put it all in the RL money market fund. The HSBC Global strategy balanced could be a good choice. 

draiggoch

In relation to the AVC you could get everything you put in back entirely tax free and depending on the specific arrangements ie salary sacrifice you could save on NI and tax so 32% rather than just the 20% as a basic rate tax payer. It does depend on your figures and as for Prudential, you can choose a cash fund instead of investing in equities.

itsmecathy

Thanks Albermarle. I will definitely invest some of the monthly money, maybe all for a bit. I have a lump sum that was going to go into an ISA that I could start a money market fund with.

itsmecathy

draiggoch said:

In relation to the AVC you could get everything you put in back entirely tax free and depending on the specific arrangements ie salary sacrifice you could save on NI and tax so 32% rather than just the 20% as a basic rate tax payer. It does depend on your figures and as for Prudential, you can choose a cash fund instead of investing in equities.

Thanks again draiggoch. There's no salary sacrifice with my LGPS scheme unfortunately. If we have any spare money in future I think I will open a AVC and stick it in there for extra tax free lump sum when I retire. Good to know there is a cash fund, I had missed that. I am thinking my partner will be limited to tax relief based on what he earns..so an AVC for me might come in handy then. 

xylophone

My partner will not have any other taxable income between 60 and 67 so he should be able to draw what we need tax free (about £120000 pa).

You like really exotic holidays?

itsmecathy

xylophone said:

My partner will not have any other taxable income between 60 and 67 so he should be able to draw what we need tax free (about £120000 pa).

You like really exotic holidays?

Haha, I like non exotic but frequent holidays but don't need that much 😆

draiggoch

I’d double check the AVC for your LGPS as many of my colleagues were unaware that there was a salary sacrifice option as it was poorly advertised. I think they call it a shared AVC.

itsmecathy

I just double checked and my scheme is not salary sacrifice. Annoyingly all the other councils next to me are. 

I am thinking now maybe the vanguard money market has slightly cheaper costs and no fee to invest (though I can't work out if AJBells £1.50 fee applies for the MM or not). Any reasons to avoid the Vanguard MM, I presume same if tracks Sonia or can they perform differently?

I'd still go with AJBell for the HSBC fund.

Thank you again for the help 

SVaz

You can compare them all on Morningstar.