Hello,
I hope you're all well.
The main questions I wanted to ask are
1) does it make sense for my husband to take out a SIPP?
2) if so, can he / should he contribute retrospectively for the past three years as well as this year?
Background :
I'm 45 and hubby is 50. We live on approx £10-11k a year. Hubby is now retired & I take home approx £18k per yr and plan to work for at least four more years. Our house is paid off.
We currently have 72k in his ISA and 10k in mine (both VLS 60) to bridge us till other income becomes available.
I have 8k in a SIPP also with vanguard & that is where we're putting our savings currently (approx 8k+ a year).
Hubby also has an NHS pension which he can access from 50 & in today's money would give him around £2k a year but we're putting off withdrawing for now.
I contribute 11% & my employer 21% to my workplace pension. I've been doing this for about four years. My pot to date will give me about £1.5k a year at 55 (more likely 57 with proposed changes) but I will hopefully continue contributions over the next four years or so of working hopefully so it should be more (at least 3k pa? when I'm 55/57.
Currently all our savings our going into my SIPP. We're now wondering about whether it would also make sense to put £2880 a yr into hubbys SIPP starting this year, as, as someone else pointed out here on another post I made, that we could access that five/seven years earlier than mine. We seem to have (just) enough money in the ISAs to bridge us to further pensions & state pension based on our spending patterns but aware that if we have the choice to access his SIPP earlier, even a relatively small pot of 10-20k (a year or two of our living expenses) it might make sense?
In the process of looking into this, I also read about it sometimes being able to use the previous three years pension allowance too. We're wondering if we can do that for him & if so, if it's worth doing so? I.e. contributing 2880 for this year and at least 2880 for the past three years. He stopped work in March 2020 so presumably could contribute 2880 for last year & this year. he earnt 10k the year before that & 8k the year before that. I'm thinking if he can, we just put 2880 a year into the SIPP for the previous four years in total & then keep contributing 2880 a yr on top of what's going into my SIPP going forward.
Also does it matter if we 'go over' pension contributions other than not getting the tax relief going in?
He would have also been contributing approx 2% to the NEST pension in the previous working years, so is & was part of a pension scheme during those four years (which I believe is one stipulation for retrospectively contributing) but only working /contributing for two.
We are coming to the conclusion it's worth opening a SIPP for him but wanted people's opinions in case we've missed something & also about if we can & should contribute 4 yrs in total this year, accessing the previous three years too?
We're aware that 10—15yrs down the track we may need to juggle withdrawals from the SIPPs and pensions so as ideally not go over the tax threshold esp when the state pension(s) comes on board.
I hope this makes sense, let me know if not!
Many thanks in advance.