SIPP Suitability?

[bitchstewie]

I'm an employee and pay into a pension through work to get the maximum contribution from my employer.

I have an ISA and an unwrapped account and each year I use up my ISA allowance from monthly investments or bed and ISA from the unwrapped account.

I've never been keen on the idea of a SIPP because as I understand it the money is locked away.

But I do have about £25K of NS&I savings certificates that mature in May and which drop to CPI if I renew them.

I keep being told that those certificates are like gold dust so renewing is an option.

But if I did want to cash them in would it make sense to open a SIPP with the proceeds?

My understanding is that I would pretty much immediately get 20% from the Government which feels a pretty good buffer against inflation?

I know the money would be locked away.

Other than that is there any downside?

[anonymous-user]

Index linked NS&I should IMO be held onto as a cash reserve in these 0% times even though they now apply penalties if you withdraw any time other then maturity. I can't think of anywhere else that cash-money is inflation proofed. I'd prefer the old RPI but CPI will have to do.

SIPP. Have you fully explored the AVC opportunities attached to your employment pension? Is it a DB (funded promise) scheme of any kind? The big advantage of Scheme AVCs is they can generally be used to fund "tax free cash" from the scheme.
In a stand-alone SIPP you can only ever take 25% of that stand-alone pot as tax free cash.
In a larger scheme you might be able to take 100% of your AVC's as tax free cash, leaving the employer's scheme to deal with funding your ongoing pension promise.

[xeny]

I've chosen to use AVCs with my employer (their main scheme is DB). This offers less flexibility than a SIPP, but they subsidise all the management fees, and allow me to contribute via salary sacrifice, so I save the NI.

If it is avilable to you, this may be a better option providing you don't want very fine fund selection options.

[bitchstewie]

Thanks both, pensions are an area I'm pretty thick on

AVC may be an option because as I understand it it's just paying a lump sum into my existing work pension which is via one of the large pension providers?

Because it's a discounted group plan the fees for some funds are actually less than I could buy them for via a fund platform and that's before any other SIPP or platform fees.