no/low risk product within SIPP for short term pension bridge (6 years)?

mrklaw

from retirement to wife’s state pension we need to bridge with some DC funds. We plan to use my wife’s SIPP for this. Get it to about 90k in the next 5 years, then draw it down tax free (within personal allowance) over the following 6 years - combined with my DB at 60 it should cover most essential spending, then my wife’s state pension kicks in, and mine the year after. 

This then frees up my DC pot to only need to cover frivolous stuff like holidays - which I’m assuming to be flexible, so we can cut our cloth according to market conditions as its not necessary expenses. So I’ll stay either 100% equities or something fairly high like 80/20. 

so anyway, wife’s SIPP. We don’t have long to build it up (5 years) and I want a stable target amount, most of which will be the contribution. And we don’t have long to draw it down (6 years) and again, stability of that draw down is more important than growth. 

So what is the best vehicle to do that? I get befuddled very quickly trying to understand money market funds, bonds, gilts etc so words of one syllable please - and guidance on how you’d invest in them to set up for eg a 6 year drawdown - ladder or something? 

BobR64

I used a gilt ladder to deal with a similar scenario of wanting to set aside a part of my SIPP for a reasonably guaranteed income in the first few years. I used the tool at this site to help me build it

https://lategenxer.streamlit.app/Gilt_Ladder

I have some index linked gilts in my GIA but I decided to keep it simple in the SIPP and use conventional gilts. I added a 3% escalating factor to my income requirements to simulate inflation (you can use the "advanced" tab of the tool to do this).

Albermarle

The simplest way is to keep it in cash in the SIPP. However the interest rates are not great ( around 3% currently)
The next relatively simple possibility is a STMMF ( short term money market fund) . These are not 100% safe, but pretty close and you will get a better interest rate ( they follow the BoE rate)

However some of the money at least could be in the SIPP for 10 years plus, so I would be thinking to keep at least some in a medium risk multi asset fund ( with 50% +/- 10% equities) 

NedS

Looking at the yield curve for gilts maturing in 6-11 years time (your time window), the yields are in the range of 4-5%

Given you can get 4% now in a money market fund, I'd probably buy the long end of the curve first to lock in the higher rates, so use this years contributions to purchase gilts for the final year before SPA and work backwards each year from there with the final year of contributions going straight into a money market fund to pay for her imminent retirement.