What's the advantage of a SIPP?

JakeHyde

Right, I think I'll do it then.  InvestEngine 0.15% fees.  £2880 Bosh!  Thanks so much everyone, for helping me navigate this!

fun4everyone

JakeHyde said:

Sadly, I don't have anyone to leave my estate to... So I'll need to get working on that ASAP!😅  I think I'm going to go with InvestEngine, I already have my S&S ISA with the, and at 0.15% it's not a bad fee.

To be honest... I kinda think I'm sort of semi-retired already?!? I've been looking after my dad, after losing mum a year ago. Any work I do will be trying to pursue something I love.  But I guess I'll need to find some work to give me a better quality of life (I'm hardly living in the Bahamas), and stop me running out of money when I'm 60! haha

My income is just savings, and interest at the moment, but that won't last unless I invest it into something like property or something that grows.

Wishing you the best of luck JakeHyde. If you want to continue to live off your savings then you must learn to invest appropriately for your needs, timescales and level of risk tolerance imo, especially as old age approaches if you wont qualify for a state pension for example.

JakeHyde

fun4everyone said:

Wishing you the best of luck JakeHyde. If you want to continue to live off your savings then you must learn to invest appropriately for your needs, timescales and level of risk tolerance imo, especially as old age approaches if you wont qualify for a state pension for example.

Thank you @fun4everyone - I'm juggling a lot at the moment, trying to keep my dad happy and comfy, maybe even move him closer to me so I am less stressed when he doesn't answer his phone. He's 80 this year and still a handful. haha.  I'm trying to be sensible and balanced with my inheritance, just doing my ISA allowance every year, and not placing everything on black, so to speak. I'm trying to make sure I have enough NIC to make for a full state pension, if there is even one still available for me by the time I reach that age. 

dunstonh said:
So, you get 20% relief on the contributions but only pay 15% effective on the withdrawals (Again, only what is above your personal allowance). Hence, why it beats ISA by 6.25%

Thanks, that's really interesting, and a good way to look at it!  But now I'm wondering, what if by some turn of events, I ended up in the 40% tax bracket, would I end up losing out, if I'm being taxed at 40%? 😅

Voyager2002

JakeHyde said:

dunstonh said:
So, you get 20% relief on the contributions but only pay 15% effective on the withdrawals (Again, only what is above your personal allowance). Hence, why it beats ISA by 6.25%

Thanks, that's really interesting, and a good way to look at it!  But now I'm wondering, what if by some turn of events, I ended up in the 40% tax bracket, would I end up losing out, if I'm being taxed at 40%? 😅

Theoretically you might, but it is unlikely that you would be in the tax bracket for the rest of your life. You choose when to take money out of a SIPP, so could do so only when you did not have a lot of other taxable income.

dunstonh

Thanks, that's really interesting, and a good way to look at it!  But now I'm wondering, what if by some turn of events, I ended up in the 40% tax bracket, would I end up losing out, if I'm being taxed at 40%? 😅

Do you anticipate earning over £50k a year in retirement?

Normally, to earn over £50k in retirement, you need to be earning that pre-retirement.  In which case you would qualify for higher rate relief on the appropriate amounts.

JakeHyde

dunstonh said:

Thanks, that's really interesting, and a good way to look at it!  But now I'm wondering, what if by some turn of events, I ended up in the 40% tax bracket, would I end up losing out, if I'm being taxed at 40%? 😅

Do you anticipate earning over £50k a year in retirement?

Normally, to earn over £50k in retirement, you need to be earning that pre-retirement.  In which case you would qualify for higher rate relief on the appropriate amounts.

I dunno, man.... I wanted to be a mega famous movie director, but I'm such a procrastinating P.O.S. I'll probably be no closer in 10 years than I am now! haha   I mean, Ridley Scott is 86 years old, am I right?! 😅😅🤣

jingle123

You're right that you can contribute up to £2,880 per tax year into a SIPP if you have no UK earnings, and HMRC will automatically top it up to £3,600 with 20% tax relief. You can only carry forward if you had UK earnings in those past years. If you didn’t, you're limited to the standard £2,880 personal contribution + £720 tax relief per year. That’s probably what MoneyHelper was trying to explain.  Some useful articles about SIPP here: Understanding Self-Invested Personal Pensions (SIPP) 

ColdIron

jingle123 said:

You can only carry forward if you had UK earnings in those past years

No

You just need unused annual allowance for those years (and be a member of any registered pension scheme in those tax years). You do need sufficient relevant earnings in the year that you use CF

Albermarle

jingle123 said:

You're right that you can contribute up to £2,880 per tax year into a SIPP if you have no UK earnings, and HMRC will automatically top it up to £3,600 with 20% tax relief. You can only carry forward if you had UK earnings in those past years. If you didn’t, you're limited to the standard £2,880 personal contribution + £720 tax relief per year. That’s probably what MoneyHelper was trying to explain.  Some useful articles about SIPP here: Understanding Self-Invested Personal Pensions (SIPP) 

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