How to pick a SIPP - and is it worth it?

Albermarle

What a palava. I think I'll just go down to 90% FTE instead and get an extra 26 days off each year from work 😄

It might be a palaver, but you are gaining tax wise and especially if you can get some tax relief at 40%, which is rather generous.
Also you will be able to retire with a nice pot to top up your main pensions.  

kempiejon

Albermarle said:

What a palava. I think I'll just go down to 90% FTE instead and get an extra 26 days off each year from work 😄

It might be a palaver, but you are gaining tax wise and especially if you can get some tax relief at 40%, which is rather generous.
Also you will be able to retire with a nice pot to top up your main pensions.  

If you pay and reclaim tax at a higher rate while working and investing into a pensions and can draw at a lower tax rate that is a pretty big boost to your retirement income. Still, taking a 5 week extra holiday has merit. Would you rather have the bigger pot and so be able to retire earlier with more income or slog along on 90% for a few more years?

WindfallWendy

Thanks so much everyone. 

I think I definitely will get a SIPP, but it's taken this thread for me to appreciate how the tax benefits will work out. But the upshot of that is, why *wouldn't* you pay into the pension when it automatically increases by 25%, regardless of growth. 

I do need to do more to understand which SIPP is best for me and why. Though I really just want a low fee and medium/high risk investments I think. And the _option_ to take money out at 57.

I'm still not entirely sure when and how much I'll draw down. But in the absence of needing the cash at the moment, it makes sense to stash in a pension. It might end up being my static caravan fees fund!! 😄

But I'll have to think a bit more about how I avoid paying 40% income tax on my salary... Which is made more difficult from the anticipated savings interest I'm going to generate from existing savings. But one feature is/could be that when earning within the 40% tax bracket, I then become able to claim that additional 20% back because of my SIPP pension payments. Or does that all automatically go into the SIPP too? 

Dazed_and_C0nfused

WindfallWendy said:

Thanks so much everyone. 

I think I definitely will get a SIPP, but it's taken this thread for me to appreciate how the tax benefits will work out. But the upshot of that is, why *wouldn't* you pay into the pension when it automatically increases by 25%, regardless of growth. 

I do need to do more to understand which SIPP is best for me and why. Though I really just want a low fee and medium/high risk investments I think. And the _option_ to take money out at 57.

I'm still not entirely sure when and how much I'll draw down. But in the absence of needing the cash at the moment, it makes sense to stash in a pension. It might end up being my static caravan fees fund!! 😄

But I'll have to think a bit more about how I avoid paying 40% income tax on my salary... Which is made more difficult from the anticipated savings interest I'm going to generate from existing savings. But one feature is/could be that when earning within the 40% tax bracket, I then become able to claim that additional 20% back because of my SIPP pension payments. Or does that all automatically go into the SIPP too? 

No, you only ever get the basic rate relief within the pension.

Any income tax savings benefits you, it isn't added to the pension.

And it isn't necessarily 20%, the exact amount depends on your overall tax position.  You might contribute say £5k gross but only be liable to higher rate tax on £2k.