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Stop contributing to SIPP and provider?


sam1994

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Current valuation is £200k now. Assuming I get a 5% growth (I know not guaranteed), I will hit the lifetime allowance even as they increase it.

Should I keep chucking money in to it or is there a better way? ISA is also maxed

What provider do people recommend? I am just in ETFs. Since II increased their prices I’ve been looking at moving. IWeb seem the cheapest, and the pension is held by AJ Bell. I don’t want to get locked in with any expensive exit or drawdown fees, although that’s a way off yet

Cheers

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I was trying to find out about what the lifetime allowance actually meant.

DYOR and all but it appeared that what it meant was that once you had hit it you couldn't put any more in but that the existing funds could continue to grow beyond the £1m level without problem.

Rules change of course.

 

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sleepwello'nights
45 minutes ago, sam1994 said:

Don’t have a wife or kids. I don’t have any more tax free wrappers left. 

And that is probably why you are able to invest so much :D

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Were you born in 1994..?

Me also thinks £1m limit is for deposits, not the account size.

I don't like iweb as they have very limited instruments you can buy... have just transferred all funds to IG which I personally think is the best - does cost a bit but given the money you're talking about it's easy to be exempted.

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Napoleon Dynamite

You sure this is a concern yet?

200K pension at 25, 5% growth gives you £952K at 57

Current LTA is £1.055M. 3% growth gives £2.7M at 57.

Looks like you should keep on contributing for the meantime.  Good you're on the ball though, looks like it is something that's likely to cause you a problem in the next few years.

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Napoleon Dynamite
16 hours ago, Frank Hovis said:

I was trying to find out about what the lifetime allowance actually meant.

DYOR and all but it appeared that what it meant was that once you had hit it you couldn't put any more in but that the existing funds could continue to grow beyond the £1m level without problem.

Rules change of course.

 

 

24 minutes ago, BearyBear said:

Were you born in 1994..?

Me also thinks £1m limit is for deposits, not the account size.

I don't like iweb as they have very limited instruments you can buy... have just transferred all funds to IG which I personally think is the best - does cost a bit but given the money you're talking about it's easy to be exempted.

I'm no expert (have only googled) but don't think either of these things is right:

  • You can put in as much as you want (over the LTA) but you're at risk of paying 55% tax on it.
  • The limit applies to the total value of the benefit on crystalissation (irrespective of contributions)

https://www.gov.uk/hmrc-internal-manuals/pensions-tax-manual/ptm088100

 

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3 hours ago, BearyBear said:

Were you born in 1994..?

Me also thinks £1m limit is for deposits, not the account size.

I don't like iweb as they have very limited instruments you can buy... have just transferred all funds to IG which I personally think is the best - does cost a bit but given the money you're talking about it's easy to be exempted.

Yes - 94

Worried about hitting 55% on crystallisation indeed. You are only hit with penalties when you buy an annuity / trigger drawdown etc 

They did have some sort of amnesty where if you stopped contributing you wouldn’t hit the allowance but that’s for people much older than myself 

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Democorruptcy
On 16/12/2019 at 18:43, sam1994 said:

Current valuation is £200k now. Assuming I get a 5% growth (I know not guaranteed), I will hit the lifetime allowance even as they increase it.

Should I keep chucking money in to it or is there a better way? ISA is also maxed

What provider do people recommend? I am just in ETFs. Since II increased their prices I’ve been looking at moving. IWeb seem the cheapest, and the pension is held by AJ Bell. I don’t want to get locked in with any expensive exit or drawdown fees, although that’s a way off yet

Cheers

Luckily inflation will take away part of your wealth.

Even at 5% growth and a lowly 2% inflation, you are still within the lifetime limit retiring at 75?

If you are really worried about them taking 55% you could have a gamble, Venture Capital Trust (VCT) or Enterprise Investment Schemes (EIS), lose 50% and still be better off?

 

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3 hours ago, Democorruptcy said:

Luckily inflation will take away part of your wealth.

Even at 5% growth and a lowly 2% inflation, you are still within the lifetime limit retiring at 75?

If you are really worried about them taking 55% you could have a gamble, Venture Capital Trust (VCT) or Enterprise Investment Schemes (EIS), lose 50% and still be better off?

 

I would expect to touch the pot nearer to 60.

VCT fees look quite high.

I will keep putting in money for now until I get a better idea 

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On 18/12/2019 at 01:29, sam1994 said:

Yes - 94

Worried about hitting 55% on crystallisation indeed. You are only hit with penalties when you buy an annuity / trigger drawdown etc 

They did have some sort of amnesty where if you stopped contributing you wouldn’t hit the allowance but that’s for people much older than myself 

That's probably the difference.  Whenever I'm looking these up I'm seeing how the rules apply to my situation.

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My accountant suggests I put £40k in my SIPP each year, so that's what I've been doing.. but I'm aware I can't do it forever.

Edit: also a bit concerned I've put too much money in at once, at a potential near market top, instead of averaging it in over the years. I know they say time in beats timing; but things don't seem normal at the moment. 

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longtomsilver
10 hours ago, sam1994 said:

My accountant suggests I put £40k in my SIPP each year, so that's what I've been doing.. but I'm aware I can't do it forever.

Edit: also a bit concerned I've put too much money in at once, at a potential near market top, instead of averaging it in over the years. I know they say time in beats timing; but things don't seem normal at the moment. 

You'll have already benefited from the last 3-5 years of this bull run? Nothing stopping you continuing the contributions and sitting on the sidelines by holding cash. The tax advantages put you ahead of inflation by 15+ years. At those rates you'll likely hit the lifetime limits in your late thirties - not the worst headache you can have 😂

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Yes. I think it might make sense to top it up a bit more but wait for dips to buy anything else. 
 

iWeb are offering 0.75% (BOE base rate) on cash held in SIPPs so I might move to them

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