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Jon's Musings

by on 29·12·2015

Funding Pensions

I was just writing a section of a report for an adviser and the sentence started... 'I have not considered a lump sum pension contribution each because..' and I couldn't think of a reason!  The couple were in their early 50s and had just inherited a pile of money.  They had used their full ISA allowances and had a potential IHT issue going forward.  Why wouldn't an annual lump sum into a pension be a good idea in this case?  You can no longer argue accessibility for them if the objective is to invest for more than five years, because after this time they will both be above 55.  Both clients were likely to be basic rate taxpayers all their lives.

If anything a pension may make more sense than an ISA because it would remove this money from their estate.

Another rethink is required here.  Most people take some money to the grave, so it may be sensible in some cases to fund pensions but take money from other investment first, while saving the pension money until last.

Room for another Acronym?

I was chatting to a colleague a couple of days ago about how to differentiate between different types of SIPP.  Although SIPPs traditionally allow direct investment in commercial property, and allow you to borrow to do this, there are now many platform 'SIPPs' that don't allow this. Personally I think it is time to clearly define one from the other.

I wonder why no one has come up with an alternative acronym to differentiate between full blown SIPPs and platform SIPPs?  Perhaps calling the latter Platform Only Pensions (POPs) would do the trick.  I checked and there are only 111 POPs out there so far. Time for another?