Do I need a SIPP?

Andme1

I am about to turn 48 and having paid a small amount into a pension every month for the last 27 years, I'm now actually starting to properly think about retirement. 

As it stands I have c£10k in a workplace pension and c45k in my own one. I have around £140k in saving, over half of that is spread in various cash ISAs. 

My question is would my pension fund benefit from me opening a SIPP or should I just increase my contribution to my current pension pot? I would have about £200 to put in each month. 

QrizB

£55k at 48 isn't terrible. You've got 20 more years to build a bigger pot, unless you're hoping to retire early.

Does your employer offer salary sacrifice?

MX5huggy

There’s nothing magical about a SIPP, your current pension might be brilliant or it might be a dog. What is it what are the fees? 

Are you maxing out matched pension form your employer and is the works pension paid by salary sacrifice, if it is you very likely want to increase contributions through the works pension. 

If the £140k is for retirement saving then yiu are too heavy in cash and should look to move that to pension and investments which over the long term out perform cash. 

Andme1

Thank you @MX5huggy and @QrizB lots to think about, consider and make some enquiries about.

My pension is with clerical medical and seems to have done ok over the years. I've paid in around £17k so to have £45k currently seems decent.

My work pension is salary sacrifice, I pay 3% employer gives another 6% so I'll look into increasing my contributions there rather than saving somewhere separate.

Savings wise it's not all for retirement, I have adult children and preschoolers and would like to give the little ones a good financial start and the big ones a helping hand at various points but I'll look into where to keep my current savings to maximise return and satisfy my risk aversion.

Thanks again, such a useful forum full of knowledge people 😊

Albermarle

Putting more into your pension is more important than exactly which pension.
Usually it is easier just to add more via your workplace pension, but as already said look into the fees and more importantly how it is invested .

QrizB

If your workplace pension is paid by salary sacrifice, you'll save on National Insurance as well as on income tax. Increasing your workplace contributions is likely to be the most tax-efficient approach.

Roger175

Andme1 said:

Thank you @MX5huggy and @QrizB lots to think about, consider and make some enquiries about.

My pension is with clerical medical and seems to have done ok over the years. I've paid in around £17k so to have £45k currently seems decent.

My work pension is salary sacrifice, I pay 3% employer gives another 6% so I'll look into increasing my contributions there rather than saving somewhere separate.

Savings wise it's not all for retirement, I have adult children and preschoolers and would like to give the little ones a good financial start and the big ones a helping hand at various points but I'll look into where to keep my current savings to maximise return and satisfy my risk aversion.

Thanks again, such a useful forum full of knowledge people 😊

Even if the fees associated with your work place pension are on the high side, you are likely to be better off sticking with this. Where else are you going to have somebody else pay in twice as much as you do. Add in the tax relief and the saving on National Insurance and this adds up to a great deal. You don't actually say whether you are maximising your Employer's contributions, but I suspect not. If you've only paid in £17k over 27 years that's only just over £50/month on average, not a lot in truth.

The other thing to look at is your investments - what funds are you in? You may well be in just the default fund which may not be the best for the growth that you need at this stage in your journey.
 

Andme1

@Roger175 thank you so much for commenting! I had just assumed that I was maximising employer contributions, however without your comment I wouldnt have looked into and Ive just increased my own contribution to 5% which increases my employers to their max of 8%. I feel like middle age has crept up on me and although I started well all those years ago have not done actually anything since. I have doubled the contribution to my personal plan too and am feeling like Ive taken some control of the getting old situation.

Roger175

Andme1 said:

@Roger175 thank you so much for commenting! I had just assumed that I was maximising employer contributions, however without your comment I wouldnt have looked into and Ive just increased my own contribution to 5% which increases my employers to their max of 8%. I feel like middle age has crept up on me and although I started well all those years ago have not done actually anything since. I have doubled the contribution to my personal plan too and am feeling like Ive taken some control of the getting old situation.

Nice one - free money

Also, don't forget to check the investments. 

wjr4

What age would you like to retire and how much will you be spending in retirement? 

not2plan

MX5huggy said:

There’s nothing magical about a SIPP, your current pension might be brilliant or it might be a dog. What is it what are the fees? 

Are you maxing out matched pension form your employer and is the works pension paid by salary sacrifice, if it is you very likely want to increase contributions through the works pension. 

If the £140k is for retirement saving then yiu are too heavy in cash and should look to move that to pension and investments which over the long term out perform cash. 

Respectfully I disagreee.
If you move that cash into a pension than you limit the age at which you can get it back.
It's already in cash, it could be better to invest it outside of a pension if for example early retirement was on the cards and then build up the pension via workplace pension / salary sacrifice and greater tax benefits.

If you are a 40% tax payer and part of a salary sacrifice scheme, then completely making assumptions about your out goings, you should be sacrificing anything above the 40% band and taking the massive tax benefit.
Also inquire if employer NI is paid in too. It's worth the conversation to ask them if they are not to consider doing so.

When I'm job hunting, pensions are one of the biggest things to ask about.
How a scheme is administered (for me at least) can be far more lucrative and make the lower paying headline job actually worth more - depending on your contribution amount.