Is it worth me starting a SIPP?

[SulkingInTheCatio]

I have a previous nhs pension which is currently worth about 5k a year and am still in the teaching pension which has a current value of 10k a year Think my nhs one can be taken without detriment at 65yo and the teachers one at 67yo.

I also have a previous final salary scheme with a current value of 3k a year which can be taken without detriment at 55yo.

id like to retire at 60yo but am worried about decimating my annual income by going too early. If I stay in teaching my teachers pension would be worth around 20k a year (if I took it at 67yo. So 28k a year but reduced for taking it early. Then state pension on top.

so if I paid into a sipp for the next ten years could it help bridge a gap so maybe I don’t have to claim my other pensions quite as early? I’m not expecting to make enough money in ten years to last 7 years but maybe 2 or 3 could be good?

I could probably put around £100 a month in it for the next year. But in a years time I could increase this to £300 possibly £400 a month.

or should I just put the money in a cash isa?

someone at work reckoned they started a sipp two years ago and that it’s been life changing and will mean they can retire early

Ive been looking at providers and Aviva for example talk about £5 feet for buying/selling. But not sure I can cope with being hands on. I’d rather have a managed fund.

I think if you put £100 into a SIPP the Govenment adds 25%

(Note: I am not a financial advisor.)

Yes they do. It’s a big plus for getting one for sure.

I’ve also got a couple of bonds maturing in a couple of months worth about 13k. So I could dump those into a sipp and if the government adds 25% that would be very nice of them.

guess I’m worried a bit about stock market volatility but the 25% govt addition would help with any bumps I guess.

So I used ChatGPT last night to interrogate it as to what it thought the best options were. It recommended either Aviva or AJ Bell. Never heard of the latter but apparently they’ve been around for ages and perform well. ChatGPT was really good and asked questions about what I wanted, my attitude to risk, etc and recommended that I go in a balanced fund now and then in 5 years or o change it to a cautious fund.

ChatGPT reckons if I put my bond money in, plus £100 a month for the next year and then £300 a month I should have around 58k in ten years. Which seems crazy! Obviously money can go down as well as up but the fact the govt give you the 20% uplift I am hoping will balance out the risk.

set it all up online in 5 mins and got my direct debit into it arranged. Has a nice easy to use website where I can see what’s happening.

How old are you OP?

50yo. Wish I’d done this a decade ago. Think I felt reassured I had good nhs and teachers pensions without thinking I needed to do something separate if i didn’t want to be working till I was 67!

Hi there I have a NHS pension and a SIPP and 20+ years of investing experience.

I wonder which provider you set up with in 5 minutes. I hope it's either AJBell or Aviva. There are a lot of financial scams going around. Please be careful. Please check with Financial Conduct Authority advice bearing in mind they only hold a database on the scams known to them

Also, I am somewhat doubting ChatGPT advice in respect to their calculations of 58k in 10 years based on your contributions. This is just my gut feeling based on my real life experiences.

All in all, I think opening a SIPP is an excellent idea. I am not familiar with Aviva however AJBell has a lot of investing advice, charges are very reasonable, customer service is excellent and they have 6 of their own funds for novice investors to choose from, from low risk to high risk.

In terms of the Government uplift - if you are in the 20% tax bracket, the SIPP provider will automatically claim the tax refund on your pension contributions i.e if you paid £100, you will have additional £20 deposited into your SIPP the following tax year. If you are in a 40% tax bracket you will need to claim the additional 20% yourself. Either through HMRC self-assessment tax return or by paying to someone. I found the self assessment tax return easy to fill in and takes a couple of hours at most.

I hope it helps

Comments like this make me laugh.

OP, always worth playing around with the growth calculations. A few good sites. Example below. Then you can change the initial investment, monthly amounts, assumptions on growth etc and the impact of each.

https://financialinterest.com/compound-interest-calculator/

recommended that I go in a balanced fund now and then in 5 years or o change it to a cautious fund.

Old school default advice and not relevant for every situation. Especially if it's not your main retirement fund. Read up on pensions, SIPPs, investing etc.

Also check if you can put 13k straight in- sipps have a limit annually - can't remember off the top of my head.

Also worth looking at fidelity, who I have one with or interactive investor, who DH was with til recent transfer. We have previously had accounts with AJ Bell too

I have a SIPP in AJ Bell & cant fault them. The customer service is second to none (if you need to ring them the call is answered almost immediately by someone from the UK who is always willing to help). Their fees are incredibly low & my SIPP has performed really well (I have chosen the investment trusts). All my DC now have a SIPP set up (including the 8 year old) to hopefully set them up for life.

I have a SIPP with trading 121. I put mine into the S&P500 global.

Im very happy with it so far

I have an old workplace pension with Aviva, I can still contribute to it and find it easy to navigate and can change my funds that I’m investing in easily if I wish. Customer service is good. My downside is the 0.75% management fee but my funds have no ongoing charges. The Aviva SIPP has a lower % management fee I just haven’t switched bc I like the performance of the funds I’m in and they’re not available in the SIPP.

I have other SIPPs with other providers. But appears to be irrelevant bc OP you’ve gone all in on the advice of AI?

I was going to add that...
'I am also not a Doctor, a Garage Mechanic, a Fishmonger nor a Bus Driver.'

But I thought that might be a bit silly!

I didn’t just ask ChatGPT. I used a variety of other sources as well. AI did say I could be less cautious than usual for someone my age as it’s not going to be my main pension so I think it personalised the advice a bit.

@Kosenrufugirl yes AJ Bell. Who id never heard of before ChatGPT suggested them. I then did come off AI and do further research

fees are 0.45% which iirc is less than Aviva.

OP Interactive Investor has a flat monthly fee which is £15 a month if you have over £100k with them ( just £5 if it’s less ). The fee isn’t a % of your investment like all the other companies like AJ Bell, Hargreaves Lansdown, Trading 212, IG and more I can’t remember.

I've recently felt exactly the same as you, although I'm a little older.

I'm paying some into a SIPP and some into a S&S ISA for the flexibility and (different) tax benefits.

How is your mortgage situation? Are you a higher rate taxpayer?

If you have a defined benefit pension, aren't there restrictions around how much you can put into a private pension?

I'm not a financial advisor and am a bit clueless 😊

There are restrictions for everyone. It's just harder to calculate the deemed amount contributed if it's a DB scheme.

Mortgage is paid off. I have around 36k in a cash isa, 13 k In bonds which I’m going to put in the sipp, about 12k in a stocks and shares isa, a few grand in current accounts.

yes I’m a higher rate tax payer.

my disposable income is a bit scuppered atm due to paying dds rent. Only another year to go

There are restrictions for everyone.

I know that. It's this bit I'm talking about:

It's just harder to calculate the deemed amount contributed if it's a DB scheme.

I should have added that when you take your pension you can (at the moment) take 25% tax free.

(Note: I am still not a Financial Advisor, nor a Monkey Trainer, Plumber, Balloon Animal Entrepreneur or Phlebotomist.)

Out of interest do the funds you’re investing in with AJ Bell have OGCs?

No idea. 🤣