Starting a SIPP

Pml61

Hi 
I am due to retire when I am 64 in April 2025. I will have two DB final salary pensions and a DC pension on which I am going to take the 25% tax fee lump sums totalling circa £220k. My wife retired due to redundancy a number of year s ago and started to look after grandchildren so has not worked since and has a small pension circa 3k a year which are her only earnings. My question is can I set up a SIPP for her, can she claim tax relief on contributions and what is the max annual contributions she can make. She has her own savings and we have joint savings also which can be utilised.

Marcon

Pml61 said:

Hi 
I am due to retire when I am 64 in April 2025. I will have two DB final salary pensions and a DC pension on which I am going to take the 25% tax fee lump sums totalling circa £220k. My wife retired due to redundancy a number of year s ago and started to look after grandchildren so has not worked since and has a small pension circa 3k a year which are her only earnings. My question is can I set up a SIPP for her, can she claim tax relief on contributions and what is the max annual contributions she can make. She has her own savings and we have joint savings also which can be utilised.

She can set up a SIPP (if done online, then of course you can be the one controlling the mouse!). She has no earnings, so the maximum she can contribute and get tax relief on is £2,880 per annum. The provider will claim basic rate tax relief and that will be added to her pot.

squirrelpie

Pml61 said:

I will have two DB final salary pensions and a DC pension on which I am going to take the 25% tax fee lump sums totalling circa £220k.

I know it's not your question, but a fair few people come here intending to take the whole 25% tax free when they retire without any specific plans to use the money. They may do better by keeping the money in the pension(s) for now if they don't need the money immediately. So if you feel like explaining why you're planning to take the full 25%, people might suggest alternative ideas. DB pensions tend to be more complicated, of course.

Albermarle

 I will have two DB final salary pensions and a DC pension on which I am going to take the 25% tax fee lump sums totalling circa £220k.

With a DB pension you do not strictly get 25% tax free. You get offered a PCLS ( Pension Commencement Lump sum) that is tax free but is calculated by the scheme according to certain rules. By taking the PCLS, you get a reduced pension.
As per the post above do you have specific plans for the £225K? as it is not always the best idea to take it all unless you really need it.

Once you stop work you can still contribute to a DC pension/SIPP, with the same rules as your wife. That is maximum £2880.

LHW99

Is you wife claiming grandparent's NI credits? Have you both checked your SP forecast?

If she is likely to fall short of a full pension, even with credits, paying voluntary NI is a good use for some of the savings.

xylophone

State Pension Forecast

https://www.gov.uk/check-state-pension