Benefits and SIPPs

[Jade]

Hiya all,

I'm 47 and Mr Jade is 52.

I have 10k in an ISA & 20k in a SIPP, both with vanguard.

He has 69k in an ISA & 3.5K in a SIPP, also with vanguard.

He's retired and I'm working part time earning £20k pa approx. I'll do that for 2 more years to hopefully add 20k to the savings above which we've calculated should be enough to bridge us to state pension on cash withdrawals alongside small pensions for him via the NHS and the USS pension for me. I'll decide also in two years whether to continue or not, at less hours.

House is paid off and we live happily on approx £11k a year.

He was looking today at benefits information and saw that if the savings were in a SIPP rather than ISA we'd be entitled to Universal Credit. We're wondering if we could move our allocations above around so most of our money was in the SIPP? We'd have to have a play around and have bridge money between different stages but wondering if anyone knows about this and if we'd be entitled to and able to do this?

Cheers.

[MarcherLady]

In order to qualify for UC you have to have savings lower than £16k. SIPPs and other pensions are not counted towards those savings.  However, you and your husband have to make a joint claim for UC, and the eligibility rules are applied across your savings and income as a couple.

In theory, even though he isn't working, your husband could move funds from his ISA to his SIPP, depending on the rules of his SIPP for making payments. However, bear in mind that once the funds are in a SIPP he cannot take them out again until he is 55.

Because of the Joint savings rules, you would have to move your ISA into your SIPP as well. Due to the access date for SIPPs changing in 2028 you would not be able to access the funds in your SIPP until you reach 57 (under present rules - those might change in the future, but are more likely to go up than down...)

However, I think that your work income is too high for you to qualify for UC.

This link points to how it all works and a benefits calculator.

Even if you did qualify you also need to consider that when you start taking your money out of your SIPPs that counts as income for tax purposes, which withdrawals from an ISA do not.

All in all, I think it is possible to do what you are suggesting only by cutting your income and savings and you would be sacrificing flexibility and making yourselves a hostage to changing Government regulations - personally I would avoid that in the current economic and political circumstances.

[Jade]

Hi MarcherLady!

Hope you're well.

Thanks for this info, it's really helpful.

I think your last point is right, I think it would substantially reduce flexibility but we'll check out the benefits calculator too.

[Bluenose1966]

Unfortunately you can only put up to your net taxable earnings into a SIPP, and if you don’t work the max is £2880.
If your husband did that it would be topped up to £3660 and if he hasn’t used his basic tax allowance the over £700 per year additional income.
Are you claiming Marriage Allowance personal allowance if he has less than £12,570 taxable income?
Worth looking at MSE Pension board

[Jade]

Unfortunately you can only put up to your net taxable earnings into a SIPP, and if you don’t work the max is £2880.
If your husband did that it would be topped up to £3660 and if he hasn’t used his basic tax allowance the over £700 per year additional income.
Are you claiming Marriage Allowance personal allowance if he has less than £12,570 taxable income?
Worth looking at MSE Pension board

Thanks Bluenose. Yes, we put 2880 in his SIPP last year and are claiming the marriage allowance.