Sipp

[moominmama]

first time posting in a long time, it has been an 'interesting' time for us, but we are happy, healthy and financially secure (well as financially secure as any of us can be) and with family members loosing jobs and having drastic declines in income, we have so much to be grateful for.

wondering if anyone knows much about Sipps and can give any advice. I have a small Sipp from a job several years ago, not worth much, and held in cash - thankfully moved it to cash just before Brexit vote. I am not adding to it, so it really is just sitting there, doing nothing. We are thinking of buying a plot in Ireland so it would be really useful for that if we could access the cash now. I have done quite a bit of research, and my understanding is that I can not access any of it until I am 55, and even then only part of it. I have not sought 'proper' financial advice as it is so expensive, and not that much in the Sipp to justify it. Does anyone have any experience of cashing in a Sipp early?

ta.

Moominmama

[jansman]

I have several pension pots spread all over, as you do when you flit from job to job, as I have done this last ten years. I have looked into what to do, and it is a bl**** complicated web! As you say, financial advisers are expensive, and my experience with them in the past has not been beneficial to me- them yes- but not me. I’ll say no more on that, suffice to say that my late Dad was fond of saying that solicitors and financial ‘experts’ are the sharks that swim on the surface of society.

What I do know, is that at 55 ( apparently this will go up to 57 in a couple of years), you can take 25% tax free. If you want the rest of it ( all of it) you will get caned for 40% in tax! As far as I am aware , your Sipp is the same as any other pension saving wrapper.

Sadly, pension plans are Über complicated, and there is zero standardisation- which if there were- would make your question irrelevant.

Another thing of course, is that you have to be careful if you are still earning another income. You will get caned again by HMRC.

Good luck with whatever decision you make.

[korolev]

I have several pension pots spread all over, as you do when you flit from job to job, as I have done this last ten years. I have looked into what to do, and it is a bl**** complicated web! As you say, financial advisers are expensive, and my experience with them in the past has not been beneficial to me- them yes- but not me. I’ll say no more on that, suffice to say that my late Dad was fond of saying that solicitors and financial ‘experts’ are the sharks that swim on the surface of society.

What I do know, is that at 55 ( apparently this will go up to 57 in a couple of years), you can take 25% tax free. If you want the rest of it ( all of it) you will get caned for 40% in tax! As far as I am aware , your Sipp is the same as any other pension saving wrapper.

Sadly, pension plans are Über complicated, and there is zero standardisation- which if there were- would make your question irrelevant.

Another thing of course, is that you have to be careful if you are still earning another income. You will get caned again by HMRC.

Good luck with whatever decision you make.

Not quite. After taking 25% of the "pot" as a tax-free lump sum, the remainder is taxable at your standard rate. The 40% rate doesn't start until you earn £50k+.
Before I took early retirement in 2019 I had to learn a lot about how my pensions worked

[jansman]

Thanks for the correction.Truly. Shows how damned complicated it is. As I will admit,I am no expert.

[Arzosah]

A good place to start with current education, moominmama, is here https://www.moneysavingexpert.com/pensions/ There's a lot of detail in the subheadings, and further links. Good luck! It's really important to faff around with this stuff to minimise your tax bill as much as possible - e.g. I have some rental income in France, and it's cut in half at the moment because of the pandemic - that means I could take a bit of drawdown money and not be taxed at all on it.

And a "trick" a lot of people seem to be using - if the interest your money earns would take you over a tax threshold, think about premium bonds as a place to stash your money, e.g. while you're waiting for the legalities to finish so you can buy the piece of property you have your eye on. There's always a chance you might actually win something life changing too

[korolev]

And a "trick" a lot of people seem to be using - if the interest your money earns would take you over a tax threshold, think about premium bonds as a place to stash your money, e.g. while you're waiting for the legalities to finish so you can buy the piece of property you have your eye on. There's always a chance you might actually win something life changing too

I put some of my pension lump sum into Premium Bonds. I seems to win £50-£100 a month (this month though, a whopping £150). When you work out the average return, it runs at about 1.2% P.A.

[Arzosah]

And a "trick" a lot of people seem to be using - if the interest your money earns would take you over a tax threshold, think about premium bonds as a place to stash your money, e.g. while you're waiting for the legalities to finish so you can buy the piece of property you have your eye on. There's always a chance you might actually win something life changing too

I put some of my pension lump sum into Premium Bonds. I seems to win £50-£100 a month (this month though, a whopping £150). When you work out the average return, it runs at about 1.2% P.A.

Yep, a lot of my acquaintances seem to be averaging a return of 1% a year, or slightly more. When you take into account how safe it is, and how flexible it is, that's a good deal. Sort of - today's inflation figures are 2.1% p.a., but there are very few accounts that will approach that now, unless you're prepared to do a good deal of faffing.

One thing I noticed recently is that Nat West offer a £1 a month reward for downloading their app and opening it a minimum of once a month. When you get paid to do something that you need to do anyway ... thats a good deal. A few of those deals (eg Nectar has appreciable freebies too, though I don't use it) to be done in a queue or a boring bit of tv etc, it starts to add up.

[Medusa]

Pensions Advisory Service is free and was helpful for us. What I did learn was that if you take some of your money at the age of 55 there is then a limit about how much you can pay into your remianing fund each year.

[moominmama]

I deal finance at work, and I thought that was bad - dealing with sub-projects, pre-payments, etc., it is nothing like the complexity of the pension system. You could almost think it was designed to be deliberately complex so people could not understand, and financial advisers could earn a small fortune charging to provide not very good advice!


moominmama

[jansman]

I deal finance at work, and I thought that was bad - dealing with sub-projects, pre-payments, etc., it is nothing like the complexity of the pension system. You could almost think it was designed to be deliberately complex so people could not understand, and financial advisers could earn a small fortune charging to provide not very good advice!


moominmama

That is my opinion too.Go on to Money Saving Expert,and they slag you off for not understanding pensions,then tell you to get a financial advisor!!!! Then you get the bragging rights: “can I retire on a million pounds”.Any less ,they talk to you as if you are ( an ignorant)pauper.