Pension fund first or SIPP

Baldytyke88

I may well be retiring this year at the age of 64 1/2. I can claim my West Yorkshire Pension Fund, or leave it for a year or so?

I also have shares invested in a SIPP, so which to claim first?

Whenever I claim the WYPF, it will always increase with CPI, where as the SIPP invested in shares, will generally increase more than CPI; so I should claim the WYPF and leave the shares invested as long os possible.

By the time I retire, I also expect to have some AVC pension. I am also hoping to carry on working, either part time of self employed.

bjorn_toby_wilde

You say 64. Is the WYP reduced for taking it early? Will it increase if you take it late and by how much?

The investments tend to beat inflation if left for long enough but could also take a big hit in the event of a market downturn.

When will you receive your SP? Might you drift into Higher Rate tax if you leave it later to access the SIPP? Remember you can access it and move it to an ISA even if you don’t need the money right now.

Lots of things to consider and I bet I’ve missed a couple.

Linton

https://forums.moneysavingexpert.com/discussion/6657332/pension-fund-first-or-sipp

An efficient effective retirement financial strategy should provide both certainty in the short/medium term, particularly for essential expenditure, and the benefits of riskier investing for long term growth for the rest of your life.

Your DB pension with your Sate Pension, your SIPP and employment are doing different jobs. How you balance between them depends on your needs over time and the amount of income they each generate. Without those figures it is difficult to give a reasoned proposal for what you should do.

I suggest you make a plan covering a lengthy retirement showing how you can meet your essential income needs, desired discretionary expenditure and possible wish to leave money for your beneficiaries. This should enable you to optimally configure your income streams.

Baldytyke88

https://forums.moneysavingexpert.com/discussion/comment/81903169#Comment_81903169

I believe taking the WYPF early does reduce it; it isn't a penalty, just a reduction for claiming more years.

I will get the full state pension at 67, no higher tax rate, my earning will always be above the personal allowance.

I do plan and write down my income before and after claiming my pension, but I haven't done that in detail.

Yorkie1

If you intend to continue working in some form, and may wish to contribute more than £10K per year into a SIPP or other pension type, then don't take any taxable cash from your non-Defined Benefit pensions, as to do so will trigger the MPAA limit of £10K.

Albermarle

where as the SIPP invested in shares, will generally increase more than CPI; 

Over the long term most likely yes, but in the short/medium term anything could happen.

Baldytyke88

How does the AVC work, I only started it this year, my main reason was to take advantage of the tax advantages, I am hoping any fees will not outweigh the tax advantages.

DRS1

https://forums.moneysavingexpert.com/discussion/comment/81903623#Comment_81903623

I assume the AVC is part of the WYPF? If so isn't there some way to take the AVC at the same time as the main WYPF pension in the form of a tax free lump sum? You may be able to do that and get all of the AVCs as tax free lump sum. You need to check that with the fund administrators (or ask @Silvertabby). If you take the AVC separately from the main pension you will probably be limited to 25% as tax free lump sum just like with the SIPP.

Silvertabby

https://forums.moneysavingexpert.com/discussion/comment/81903951#Comment_81903951

Most people take out LGPS AVC contracts for the double tax benefit - tax relief in, tax free (subject to HMRC limits) out. But there is a second option - ie, use the funds to buy additional fully index linked LGPS benefits.

There are management fees, but you would have to ask your actual ACV provider - not all LGPSs use the Pru.