SIPP V S&S ISA

ossie48

My wife is retired (56) and living off my DB pensions. 

At aged 60 she'll benefit from a small final salary pension and another pension from the same employer (afterwork). I think we're talking about £6k a year for both. She's unable to continue to contribute to either.  State pension is sorted having reached max contributions. 

We opened a Vanguard SIPP to benefit from the annual contribution, however we didn't cash out yearly (just lazy) but kept it going for three years now so the balance is up at £12k (I invested it in VLS80 after it was lying as cash for some time)

We now have a substantial amount to further invest. Do I continue to fund the SIPP or just stick it all into our ISA allowances over the next few years and draw that SIPP down now (non earner so shouldn't pay tax)

Is there any benefit in keeping that SIPP going and if so what is it other than the annual £700 up to age 70. Thanks.

Marcon

ossie48 said:

My wife is retired (56) and living off my DB pensions. 

At aged 60 she'll benefit from a small final salary pension and another pension from the same employer (afterwork). I think we're talking about £6k a year for both. She's unable to continue to contribute to either.  State pension is sorted having reached max contributions. 

We opened a Vanguard SIPP to benefit from the annual contribution, however we didn't cash out yearly (just lazy) but kept it going for three years now so the balance is up at £12k (I invested it in VLS80 after it was lying as cash for some time)

We now have a substantial amount to further invest. Do I continue to fund the SIPP or just stick it all into our ISA allowances over the next few years and draw that SIPP down now (non earner so shouldn't pay tax)

Is there any benefit in keeping that SIPP going and if so what is it other than the annual £700 up to age 70. Thanks.

I presume you mean the 'tax top up' at basic rate for someone with no earnings? If so that continues up to age 75.

Could be an IHT advantage if you want to leave funds to someone other than your spouse, if you are likely to be in IHT territory, although there are strong rumours that could change. 

swindiff

If your wife is not earning it may be wise to draw from the SIPP up to her tax free allowance, so you can get the maximum amount out without paying tax on it.  If you leave it there until she is drawing her state pension it is likely that the state pension will use up the majority, if not all her tax free allowance in the future, meaning she could only get 25% out of her SIPP tax free rather than 100% of it.  Drawing taxable cash from the SIPP wold trigger the MPAA limiting her contributions going forward to £10k/year.  But if she is not planning on working in the future, this isn't relevant.
What she takes out of the SIPP could be invested in the same way in an ISA, sheltering it from any tax in the future.