Paying into a SIPP when reliant on UC - any advice?

michaels

It would probably make sense for you to pay 2880 into a sipp each year and have it grossed up to 3600 and then withdraw the 3600 each tear - there is a thread here on how to do tis.

You could then invest it and any other spare savings in a S&S isa into a 'green' fund. 

This is not extremely complicated and would not need an advisor but will take a bit of reading up.

PostHoc25

Albermarle said:

 But they acknowledged there is a gap in the market for low income ethical investors like myself and are working to try and find options in the future.

There is in fact a gap in the market for all low value investors, who can not access financial advice. It is not just an ethical issue.

I hope to book a government pension advice call in the coming weeks to see what they might advise.

You will get no personal financial advice from the Govt., only general guidance.
If you mean 'PensionWise' their service is anyway geared to people about to withdraw from a pension, not adding to one. 

Yes, I learnt years back to preface any call to finacial service companies by quickly stating my situation to be sure I wasn't wasting my time or theirs I posited the idea of something similar to the community collective switching schemes for energy where a group of residents can pool it's purchasing power. I wonder if there is some similar way the financial world could harness a herd of low income bods 

Pensionwise call made today, an enjoyable 3 minutes of listening to the recording to find out they were closed, now that you say they are only if I have a pension - call back time is saved! Thanks. 

Happy New Year!

Marcon

michaels said:

It would probably make sense for you to pay 2880 into a sipp each year and have it grossed up to 3600 and then withdraw the 3600 each tear - there is a thread here on how to do tis.

You could then invest it and any other spare savings in a S&S isa into a 'green' fund. 

This is not extremely complicated and would not need an advisor but will take a bit of reading up.

OP is 50, so the earliest they could access their pension would be at the age of 57 - unless they have supporting written medical evidence that they are too ill to work again. Added to which they've said they want the funds to be available to bolster their state pension, so probably doesn't make sense for them to do that.

michaels

Marcon said:

michaels said:

It would probably make sense for you to pay 2880 into a sipp each year and have it grossed up to 3600 and then withdraw the 3600 each tear - there is a thread here on how to do tis.

You could then invest it and any other spare savings in a S&S isa into a 'green' fund. 

This is not extremely complicated and would not need an advisor but will take a bit of reading up.

OP is 50, so the earliest they could access their pension would be at the age of 57 - unless they have supporting written medical evidence that they are too ill to work again. Added to which they've said they want the funds to be available to bolster their state pension, so probably doesn't make sense for them to do that.

Unless they are filling their ISA already then better to have emptied the pension and transferred to ISA before state pension age as otherwise it will be taxed so still makes sense to do the 3600 thing every year and then draw it out between 57 and 67 into an isa

Marcon

michaels said:

Marcon said:

michaels said:

It would probably make sense for you to pay 2880 into a sipp each year and have it grossed up to 3600 and then withdraw the 3600 each tear - there is a thread here on how to do tis.

You could then invest it and any other spare savings in a S&S isa into a 'green' fund. 

This is not extremely complicated and would not need an advisor but will take a bit of reading up.

OP is 50, so the earliest they could access their pension would be at the age of 57 - unless they have supporting written medical evidence that they are too ill to work again. Added to which they've said they want the funds to be available to bolster their state pension, so probably doesn't make sense for them to do that.

Unless they are filling their ISA already then better to have emptied the pension and transferred to ISA before state pension age as otherwise it will be taxed so still makes sense to do the 3600 thing every year and then draw it out between 57 and 67 into an isa

Not quite that simple. Unlike pensions, savings in an ISA are taken into account for means tested benefits at any age.

michaels

Marcon said:

michaels said:

Marcon said:

michaels said:

It would probably make sense for you to pay 2880 into a sipp each year and have it grossed up to 3600 and then withdraw the 3600 each tear - there is a thread here on how to do tis.

You could then invest it and any other spare savings in a S&S isa into a 'green' fund. 

This is not extremely complicated and would not need an advisor but will take a bit of reading up.

OP is 50, so the earliest they could access their pension would be at the age of 57 - unless they have supporting written medical evidence that they are too ill to work again. Added to which they've said they want the funds to be available to bolster their state pension, so probably doesn't make sense for them to do that.

Unless they are filling their ISA already then better to have emptied the pension and transferred to ISA before state pension age as otherwise it will be taxed so still makes sense to do the 3600 thing every year and then draw it out between 57 and 67 into an isa

Not quite that simple. Unlike pensions, savings in an ISA are taken into account for means tested benefits at any age.

Good thinking. Not sure if health related UC is means tested, I guess probably.

Then there is all that stuff about needing to be on pip before SPA and being in pension credit making you better off than having a state pension plus private provision a tiny bit over the threshold.....

PostHoc25

Marcon said:

michaels said:

Marcon said:

michaels said:

It would probably make sense for you to pay 2880 into a sipp each year and have it grossed up to 3600 and then withdraw the 3600 each tear - there is a thread here on how to do tis.

You could then invest it and any other spare savings in a S&S isa into a 'green' fund. 

This is not extremely complicated and would not need an advisor but will take a bit of reading up.

OP is 50, so the earliest they could access their pension would be at the age of 57 - unless they have supporting written medical evidence that they are too ill to work again. Added to which they've said they want the funds to be available to bolster their state pension, so probably doesn't make sense for them to do that.

Unless they are filling their ISA already then better to have emptied the pension and transferred to ISA before state pension age as otherwise it will be taxed so still makes sense to do the 3600 thing every year and then draw it out between 57 and 67 into an isa

Not quite that simple. Unlike pensions, savings in an ISA are taken into account for means tested benefits at any age.

Just to clarify. I'm way under the £16K savings threshold (by ten+ thousand!) I don't currently have an ISA just a few low interest regular savings accounts. With my health instability, and debt repayments, locking funds away hasn't always worked for me in the past, but my money management has got better in the past 12 months so I'm hoping I can safely commit to £25 a month initially and was wondering if it's advisable to go for some kind of pension (I have none currently).  But maybe for now an ISA would be a good start. In terms of ethical options, I know Triodos Bank offer a couple. Thanks for mentioning ISAs I had somewhat forgotten that was an option.
In terms of my future on benefits, I am just on UC on the LCWRA, but who can say what the situation will be 17 years from now when I reach 67 and am eligible to claim state pension?

PostHoc25

Albermarle said:

 But they acknowledged there is a gap in the market for low income ethical investors like myself and are working to try and find options in the future.

There is in fact a gap in the market for all low value investors, who can not access financial advice. It is not just an ethical issue.

I hope to book a government pension advice call in the coming weeks to see what they might advise.

You will get no personal financial advice from the Govt., only general guidance.
If you mean 'PensionWise' their service is anyway geared to people about to withdraw from a pension, not adding to one. 

Sorry, thought I had typed a reply to you but can't see it!
Yes, all the digging around online I have done strongly suggests if you don't have at least £10/£20K to invest, (and more generally £100K) is quoted, it is somewhat difficult to find help. I've found a dozen local providers via Unbiased who supposedly have a £0 minimum, but it seems somewhat oxymoronic to approach a "Wealth Management" firm in my situation. But I'm gonna give a couple of them a quick call and see how accurate the £0 min to invest actually is!

Thanks for the info re: PensionWise.
I'm also gonna see what signposting my local CAB might be able to do. From what I can ascertain, debt management is the focus of a lot of help, rather than next steps to financial stability for low income bods.

PostHoc25

Update:
So, having spoken with Moneyhelper (to both their pensions advisor and a benefits advisor) I've decided to opt for a 2 year ISA initially. The £6000 savings threshold that would impact my current benefits, means that realistically, I don't want to accrue more than £3.5-£4K in an ISA (or Pension) because I have to consider the amount in my current account and other smaller savings pots too.

Triodos do a 2 year Fixed Rate Ethical ISA which I think is a good place for me to start and see how it goes - importantly it meets my ethical investing requirements. Based on state pension rate today and my current UC rate there is a £7K defecit approx, if I had to rely on just the state pension. But again who knows what the situation will be 17 years from now and I could qualify for Pension Credit helping to close the gap somewhat. Any savings I can lock up will be helpful.

Once I've finished the 2 years, I will then consider if it is worth saving somewhere between the £6K and £16K limits. If the small monthly reduction in UC can help save a  bit more it might be worth it. Based on the current restrictions, it seems like a precarious juggling act to try and save only in chunks of £250 or as close to as possible to maximise savings compared to the deductions to UC.

If anyone is currently in between the thresholds, I'd be interested to know how it works in practice. Do you submit monthly statements/declaration of your savings? 

• First £6,000: Ignored completely; no impact on your UC.
• Between £6,000 and £16,000: Your savings are treated as if they're earning you income.
  • For every £250 (or part of £250) you have over £6,000, the DWP assumes you earn £4.35 a month.
  • This assumed income (£4.35 per £250) is deducted from your UC payment.
• Over £16,000: You generally won't be entitled to Universal Credit at all. 

I really appreciate all the comments and suggestions. This was a very unknown area to me and you've all given me food for thought!

michaels

Thanks. As noted above, money in pension does not get counted against the 6-16k capital rule but instead counts as income when drawn out.