SIPP to ISA - tax free income.

Pizzadiactione

I have recently turned 55 and can therefore access my pension ( SIPP ).
I am thinking of taking out tax free lump sums and paying them into my ISA. 
My reasoning is that I can have exactly the same investments in my ISA and SIPP but once over the tax threshold I'd pay tax on income from SIPP but not from ISA.

I am aware of the inheritance tax implications but, disregarding them, does anyone have an opinion as to whether it's a good or bad idea?
To me it seems a no brainer but from searching the internet, it does not seem to be a common thing. 

E.g.
ISA pot £240k, SIPP pot £240k.
Drawdown £80k from SIPP. Leave £60k in drawdown account. Pay tax free 25%, £20k into ISA. Invest in 5% income fund. Get the income tax free.
Repeat for the next two years.

Sam_666

Nothing wrong with that, many do it.
However, you need to reconsider your ISA plan, as 5% is very poor return.

SVaz

Not a poor return at all if you are going to be using the money for early retirement etc.
For longer term there are S+S ISAs.
That’s what my Wife is doing,  she can get her entire Sipp out tax free over the next 6 years,  half going in a cash ISA, half invested long term in a global index tracker. 

eskbanker

SVaz said:

Not a poor return at all if you are going to be using the money for early retirement etc.
For longer term there are S+S ISAs.
That’s what my Wife is doing,  she can get her entire Sipp out tax free over the next 6 years,  half going in a cash ISA, half invested long term in a global index tracker. 

The 5% referred to S&S investing, not cash:

Pizzadiactione said:

Invest in 5% income fund.

poseidon1

eskbanker said:

SVaz said:

Not a poor return at all if you are going to be using the money for early retirement etc.
For longer term there are S+S ISAs.
That’s what my Wife is doing,  she can get her entire Sipp out tax free over the next 6 years,  half going in a cash ISA, half invested long term in a global index tracker. 

The 5% referred to S&S investing, not cash:

Pizzadiactione said:

Invest in 5% income fund.

Rather depends on the income fund.

As an example,  I have Man Income Professional income fund units in a SIPP . Historical yield is 5.25%, dividends are ( unusually)  paid monthly and  there is the additional prospects of capital growth from the actively managed equity portfolio.  I consider it an ideal part of a  SIPP equity income investment, which throws out a decent level of recurring income.