any tips on SIPPS

A slightly off-topic point about SIPPs. A SIPP can put (by you) into a very useful 'income drawdown' state wher you pay yourself a pension but retain control of the remaining capital, which a conventional money purchase pension fund does not have. With them you buy an annuity andthe fund is gone once the payments start. I suggest you make sure you understand what happens to the fund if you die while the fund is in income drawdown (if you plan to use that facility). It is not straightforward.

Robert

Have you got any exciting links to share on the subject ? Or a brief summary of your understanding.

My understanding is that up to the age of 75 it goes to your beneficiaries/next of kin etc after a tax charge of somewhere above 40% I think it might be 55% - Am I close ?

I found it very hard to get concrete information on what happens to the fund if you die without dpendants . I think it works like this.

You can put the SIPP (or, with some providers a segment of the SIPP) into a state of drawdown and oay yoruself an income from it. the law limits how big an income you can pay yourself with a view to stopping the fund from running out.

If you die while in the drawdown state your dependants (if you have any) can use the remaning fund to buy an annuity or they can take the money (less a 35% tax charge) or they can continue the drawdown and it becomes their SIPP (if they already have a SIPP with thes same provider i think).

But, if you have no dependants things are less clear. The fund can be passed to any members of your family who have a SIPP with the same provider.

So, if , for example, you are a widow/er with grown up children (but no dependants) and you want the fund to pass to them eventually, they must open SIPPS with the same provider before you die, if they are allowed to. if they are not UK residents, for example, they would not be able to do this.

If you have no dependants, and no 'members of your family' with SIPPs at the same provider as you, then it seems tha tthe SIPP provider takes the money into their funds for the benefit of their other SIPP menbers. It does not go into your estate. Your children don't get it.

If anyone can provide a link to a definitive statement on what happens if you die with your SIPP in drawdown but with no depenants. it is a situation that has probably not yet been encoutered.

Actually, either a SIPP or a conventional money purchase pension fund as you call it can be used to buy an annuity or be put into drawdown. There is no difference between them in this matter.

Rob Graham

that is very interesting and I would like to know more. I have a money purchase (defined contribution) pension with my employer. They do not offer any income drawdown option. I must buy an annuity with it although there is some flexibility of when I do this.

Robert

Open market option -

I suggest you read through the following to understand the basics as well -

Daytona

They may not offer an income drawdown option but that does not mean it isn't there. You will be able to move the funds to a scheme of your choice when the time comes even if it doesn't say so in the scheme booklet.

Rob

I know that I can move my fund and buy an annuity with it from a different provider. But the question is can I use for income drawdown rather than buying an annuity.

The link you give only talks about the former. It does not mention income drawdown.

I would still like to see anywhere that discusses using a non-SIPP pension fund for income drawdown as opposed to annuity purchase.

Robert

I should have added that I realise that I could move the fund into a SIPP. However, what I remain to be persuaded of is that I can use a non-SIPP pension fund for income drawdown. I had believed that if I wanted to use my fund in drawdown I had to transfer it into a SIPP and therefore suffer the government's SIPP rules particularly those relating to what happens to the fund if I die without dependants while it is drawdown.

Robert

The non-SIPP pension fund can be used to buy funds within a SIPP. You just make the transfer. This may well not be with the same company. From there you can draw it down. AFAIK there are specific drawdown plans which might not actually call themselves SIPPs. But for your purposes they fulfil the same task.

Rob

You can move a non-SIPP fund into a SIPP and then convert it to drawdown. (Not sure if that works yet for protected rights)

It doesn't and won't for the foreseeable future as the government has delayed the decision.

Daytona

have you got a web link to that I cant find anything...

Indeed, which is where I currently live. I'd assumed that it'd be a Good Thing to be able to go in and bang on their desks if I was unhappy. In the end though it looks like I just stuck my (yes, 3600 p/a for the reasons Mister Raygun supposed) money somewhere pretty useless.

Why Japan? I'd been betting that since they'd already had 14 years of crap, their deflation was nearly over. That part I seem to have got right, and the Nikkei has responded reasonably well in doubling from its low. Unfortunately the fund has been consistent only in discovering yet more new lows.

FoFP

Apart from a not insignificant amount invested in more Hawkwind albums than most people would imagine possible.

FoFP

Ah yes, that's what I though the position was. You can't actually put a non-SIPP pension into drawdown; but you can move it into a SIPP and put that into drawdown. But then the SIPP fund is subject to the rathder inerous SIPP rules when you die (possible 35% tax, if no dependants then fund only transferable family members and only then if they have SIPP with same provider etc.).

"Protected rights pension

The part of your pension fund which was used to contract out of the State Second Pension (SERPS or S2P) that must be used to buy a protected rights annuity. "

"A decision into the possibility of removing the restrictions attached to protected rights has been delayed until the end of the end of the year, provoking concerns it could be the next government u-turn."

"M Holmes" wrote

How has the exchange rate changed during that time?