Stakeholder Pensions/ MoneySavingExpert.com Discussion Area

Lemmy_2

EdInvestor wrote:

Certainly you can and it's often a very sensible thing to do. But there are various issues involved in transferring company pensions, depending on what kind of pensions they are ( eg final salary/money purchase or perhaps GPPs - group personal pensions).It's usually not sensible to transfer final salary pensions. It's often sensible to transfer personal pensions, including GPPs.SOme older pensions may have guarantees,and it might be unwise to move them. You can't transfer protected rights (contracted out) money into a SIPP so at present you'll need a basic stakeholder type pension running alongside the SIPP to deal with that money - this anomaly may change later.

The mechanics are quite simple: choose a SIPP provider, open an account and then request the company to transfer the money. In choosing a provider, pick one with low costs.Depending on what you want to invest the money in ( shares? funds?) different providers will be more suitable.

How much money is involved? If not much, post some more info about the pensions here.If it's fairly sizeable you will probably be sensible to pay a fee to an IFA to look into the advisability of the transfers.

Ed - Thanks for that. The amounts aren't massive, but I think they'd be better in a single pot if possible. There are two, the larger of which is worth under £3K. I have read though that tranfer fees for pension funds can sometimes be so exorbitant that it's not worth tranfering the pension - which is why I liked the idea of this wrapper, but it sounds like I'll have to pay the fees either way.

When I transfer these amounts into a SIPP, does anything else sneaky happen - like the trabsfer counts towards my allowance for the year?

You'd think that if the government is anxious to get people to sort their own pensions, they wouldn't make it so complicated - but I'll just hop off my soap box, eh?

dunstonh

It should also be noted that SIPPs overall charges can be higher than stakeholder and personal pensions. So dont assume you will save anything by moving it to a SIPP.

If you arent particulary investment minded, you may want to hold back until the hybrid/insured SIPPs come in.

EdInvestor

Lemmy

If you're talking about 5k, a SIPP might take a while to be cost effective, depending on what you want to invest the money in. It has flat rate not percentage charges which means it's a better deal for larger funds.

You might be best with a stakeholder at this level, especially if protected rights are involved.

Try https://www.cavendishonline.co.uk for a cheap deal.

ddclutch

I am a self employed higher rate taxpayer (just!) Can I put money into a Stakeholder pension for my wife who is on standard rate and already contributing to an employer's final salary scheme. Who would get the relief and at what rate?

Or should I just contribute to a Stakeholder in my own name?

ReportInvestor

If you are a higher rate taxpayer then higher rate tax relief applies to you and not to your wife.

So your plan of action should be obvious unless your wife is a feminist.

And that last statement is not a joke given the incidence of female pensioner poverty.

ddclutch

ReportInvestor wrote:

If you are a higher rate taxpayer then higher rate tax relief applies to you and not to your wife.

So your plan of action should be obvious unless your wife is a feminist.

And that last statement is not a joke given the incidence of female pensioner poverty.

Saying that should be obvious to someone who has just asked that very question isn't terribly helpful!

If I pay into a stakeholder pension for my wife with my income (taxed at 40%) I thought that the pension would be credited with an addition at 22% and that I could then claim the additional 18% when I submit my tax returns next year. But does this only work if the stakeholder pension is in my name?

The reason for considering it this way around is that my wife is on a final salary scheme that will only produce about £6K pa. I am already drawing my final salary pension at £20K pa. When she gets her pension in 3 years time it looks like she won't be utilising all of her allowances.

ReportInvestor

ddclutch wrote:

If I pay into a stakeholder pension for my wife with my income (taxed at 40%) I thought that the pension would be credited with an addition at 22% and that I could then claim the additional 18% when I submit my tax returns next year. But does this only work if the stakeholder pension is in my name?

Sorry for any confusion created.

Yes you only get 40% tax relief on your own pension contributions.

On your wife's stakeholder pension if you contribute £2,808 a year it becomes £3,600 with basic rate tax relief but your own tax bill is not affected.

ddclutch

Thanks ReportInvestor,
Now I understand.
It isn't the tax circumstance of the person paying in that governs the tax relief. But it is the circumstance of the person whose name the stakeholder pension is for that counts.

ReportInvestor

Yes - unfortunately wives are treated just the same as partners or children. You could argue that they should be treated differently, but that's too politically / legally sensitive for the government to consider.

If the Revenue allowed 40% tax relief on contributions for children's pensions it would be a great wheeze but would work against redistribution of wealth.

Snuggles111

Can anyone help my husband? He has been contracted out of the state pension with Prduential for many years and he keeps getting these red letters from Prudential asking if he wants to stay contracted out or get contracted in. Does anyone know if the time is right to contract back in?

Thanks