It’s now 30 years since Nigel Lawson fired the starting gun on the self-invested personal pension (Sipp) revolution. The then-chancellor’s 1989 Budget included a proposal to “make it easier for people in pension schemes to manage their own investments”, with the details following several months later and the first Sipp launching in March 1990.
In the fifth episode of our jargon-free video series on self-invested personal pensions, or Sipps, Money Observer editor Faith Glasgow runs through the Lifetime Allowance, which applies to any pension, not just Sipps.
In the video, Faith explains how the Lifetime Allowance is calculated and why public sector workers such as headteachers, senior civil servants or GPs are likely to be affected, while also outlining the tax charges applied when the Lifetime Allowance is breached.
In the fourth episode of our jargon-free video series on self-invested personal pensions, or Sipps, Money Observer editor Faith Glasgow explains the limit on the amount you can pay into a Sipp and get tax relief on each year.
The video also details why those who receive income of £210,000 or more will only be able to make the minimum £10,000 of contributions with tax relief each year.
Reaching age 55 was a rude awakening in terms of pension planning and provision. Since then I have been able to pay the maximum £40,000 annually into my self-invested personal pension and to use carryover from previous years. My plan is to pay in the maximum £40,000 during the first six months of the next financial year and then take early retirement in October 2020. I can access a small number of final salary schemes for both taxable and tax-free income, leaving the Sipp invested for a few years before taking it.
In the third episode of our jargon-free video series on self-invested personal pensions, or Sipps, Money Observer editor Faith Glasgow explains the “beauty of the tax wrapper”, but points out that there is no guarantee that the status quo will continue, so investors ought to reap the rewards while they can.
In the second instalment of our jargon-free video series on self-invested personal pensions, or Sipps, Money Observer editor Faith Glasgow compares the range of investments available in different kinds of Sipp with your choices in a personal or workplace pension.
For Money Observer articles on Sipps, please click here.
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Ceri Jones investigates the questionable practices of firms that entice investors into the early release of pension funds.