Nearing Retirement and Investing £100k SIPP v ISA v other?

Bookle

Thanks @Linton

The primary motivation is to inflation proof the cash we now have and if we can get tax relief on top for my final 12 months of income, even better - my original thinking was, why wouldn't we?

Any SIPP would be invested in lowest possible risk option (not sure what that is yet!), we have no ambitious growth needs out of any investments made.

I am fine on the hassle factor and the 7 weeks worst case and we have quick access to 'rainy day' cash to plug gaps, even larger one offs.
We could also access tax free lump sum from the new SIPP if really necessary.

On your suggestion to around utilisation of the standard rate pre-state pension - can you explain a little more?

Linton

Bookle said:

Thanks @Linton

The primary motivation is to inflation proof the cash we now have and if we can get tax relief on top for my final 12 months of income, even better - my original thinking was, why wouldn't we?

Any SIPP would be invested in lowest possible risk option (not sure what that is yet!), we have no ambitious growth needs out of any investments made.

I am fine on the hassle factor and the 7 weeks worst case and we have quick access to 'rainy day' cash to plug gaps, even larger one offs.
We could also access tax free lump sum from the new SIPP if really necessary.

On your suggestion to around utilisation of the standard rate pre-state pension - can you explain a little more?

You have not given much info on your circumstances and long term income strategy.  As you have been used to a £60-100K income it is possible that your total annual income in retirement will exceed the standard rate tax band especially after you start receiving State Pension. In that case prior to starting all your retirement income it would be sensible to reduce your SIPP as much as possible through drawdowns at Standard Rate.    

Bookle

Linton said:

Bookle said:

Thanks @Linton

The primary motivation is to inflation proof the cash we now have and if we can get tax relief on top for my final 12 months of income, even better - my original thinking was, why wouldn't we?

Any SIPP would be invested in lowest possible risk option (not sure what that is yet!), we have no ambitious growth needs out of any investments made.

I am fine on the hassle factor and the 7 weeks worst case and we have quick access to 'rainy day' cash to plug gaps, even larger one offs.
We could also access tax free lump sum from the new SIPP if really necessary.

On your suggestion to around utilisation of the standard rate pre-state pension - can you explain a little more?

You have not given much info on your circumstances and long term income strategy.  As you have been used to a £60-100K income it is possible that your total annual income in retirement will exceed the standard rate tax band especially after you start receiving State Pension. In that case prior to starting all your retirement income it would be sensible to reduce your SIPP as much as possible through drawdowns at Standard Rate.    

Got it - makes sense to get anything taxable down as much as practical prior to additional income from state pension

DRS1

MeteredOut said:

DRS1 said:

Albermarle said:

DRS1 said:

Bookle said:

DRS1 said:

Presumably your taxable earnings in the tax year when you contribute to the SIPP will be more than £60k?

Yes, before tax more than £60k and less than £100k

Good.  Don't forget that the 60K is gross (ie including the tax relief that goes into the SIPP) so you would pay in £48k and the SIPP would get the other £12k from HMRC.

If you want to pay £60k net you will have to see if you have any carry forward as @NoMore mentions.

The £60K also includes employer contributions.

For carry forward it should be noted that previous to this year the allowance was £40K 

Yes and though they may be stopping it seems that won't be until June.  So a couple of months worth to take into account for 2025/6 as well as for the current/past tax years if doing some carry forward sums.

Who is "they" and what might they be stopping? Any citations for this, or is this based on social media click-bait?

They are the contributions to the OP's DC workplace pension see quote below

My contributions to existing company DC scheme would stop in 3 months. In remaining 12 months before my stopping work, I cannot pay into same company pension from that income (long story!).

I am assuming the employer contributions to that scheme stop at the same time.

What did you think I meant?

Bookle

My contributions to existing company DC scheme would stop in 3 months. In remaining 12 months before my stopping work, I cannot pay into same company pension from that income (long story!).

I am assuming the employer contributions to that scheme stop at the same time.

YES, essentially I get paid for an extra 12 months, but my workplace pension has already stopped and I receive no other benefits.

Albermarle

Sarahspangles said:

Albermarle said:

The £60K also includes employer contributions.

For carry forward it should be noted that previous to this year the allowance was £40K 

You’ll give me heart failure! Prior to 2023/24 the Annual Allowance was £40k. This is the second year of £60k.

Apologies for giving you unnecessary stress ! and to @artyboy, who got enough stress from the budget IHT changes !

Bookle

Thanks for all the feedback everyone!

Sounds like my plan A of investing the majority into a SIPP (to tax relief maximum) for the 12 months I am paid but no longer in company pension
and then open new ISA for remainder is indeed the way to go???