Is a SIPP worth it at 68?

[spiderbill]

I'm 68, still doing a bit of consultancy work, so I haven't touched my pensions yet (apart from the state one).
I have one (a personal pension that was originally a company pension) with Scottish Widows of around £175k, and a much smaller one with Sun Life of Canada (which was the result of contracting out for a while) of around £30k.

I've never had a SIPP - previous advice was always to concentrate on using ISAs for my two OEICs rather than use pensions, and I have a share / IT / ETF portfolio.

I should also mention that I've been living at my house in Slovenia for the last 3 years - came out here after my dad died in 2020 and couldn't return due to Covid travel restrictions and then came down with a rheumatic condition that has prevented travel until now. I still have my house in the UK looked after by my godson.

It appears that I can't drawdown from the Sun Life pension and will need to transfer it in order to do so. My question is whether I should transfer it to Scottish Widows and consolidate the two, or if there would be any advantage in transferring it into a SIPP with Interactive Investor (who keep offering me one at reduced initial cost).

Any thoughts on this would be much appreciated.

Spiderbill

[Sobraon]

I have slowly consolidated my pension schemes (sepárate from my employment pension arrangements) into Interactive Investor to save on fees, According to
the monevator site Interactive Investor is cheapest for "Unrestricted fund portfolios >£60k (£115k vs Vanguard)". When transferring into II their transfer office keeps you very much up to date via regular and informative messaging. Although others have reported issues with II I have found them a good company to deal with. I am a UK resident.

However I am aware that there is a general issue with "protection" regarding SIPPS in share trading companies ( like II), with the FSCS protection fixed at a maximum of £85k. Compare this with pensions held in companies that write "contracts of long-term insurance'" where the protection is unlimited. Something to mull over. I have accepted this risk on the basis that should a share dealing company go under and the government scheme tries to only compensate people to £85k the subsequent fall out would be huge.

[kempiejon]

It appears that I can't drawdown from the Sun Life pension and will need to transfer it in order to do so. My question is whether I should transfer it to Scottish Widows and consolidate the two, or if there would be any advantage in transferring it into a SIPP with Interactive Investor (who keep offering me one at reduced initial cost).

Always a bigger question that throws up others.

Check your management costs from the two providers to compare to the SIPPs out there and there are lots with different charging structures. I understand you're not using either of the pensions for income. As to whether starting a SIPP or adding to your existing provider I'm not sure there's an obvious either/or. You say if you want to get at your Sun Life pensions seems you have to something, do Sun Life option buying an annuity?

If you did get a SIPP you could also add your Scottish Widows to it depending upon what your plans are with that.
I found collecting all my assorted company private pensions into one place useful. I have a Hargreaves Lansdowne SIPP, it saved me money from charges from day 1, I can take more direct control over where I invest and there only being one statement and only 1 place to check. I collected 6 pensions into one pot but overlooked one which is still with L&G, a trivial amount with low charges so I'm a bit lazy to make the move.
Opening a SIPP at 68 means you have access to the pot immediately, if I was doing something similar at your age I'd group all my pensions together adn take my 25% tax free lump out promptly to maximise the tax advantage and prevent the government making changes to that allowance.

If you're still adding to ISAs look at the SIPP too. I'd always add the max amount each year to both if I could afford it. If picking just one perhaps the SIPP and extract 25% from that each year to maximise the tax advantage. Your relevant income tax rate is a factor here.
SIPPs and ISA should be filled each year if you have the funds, I think SIPPs could have the edge at your age if you have UK income tax. Even good for £2880 if you don't.

[Urbandreamer]

I should also mention that I've been living at my house in Slovenia for the last 3 years - came out here after my dad died in 2020 and couldn't return due to Covid travel restrictions and then came down with a rheumatic condition that has prevented travel until now. I still have my house in the UK looked after by my godson.

It appears that I can't drawdown from the Sun Life pension and will need to transfer it in order to do so. My question is whether I should transfer it to Scottish Widows and consolidate the two, or if there would be any advantage in transferring it into a SIPP with Interactive Investor (who keep offering me one at reduced initial cost).

Any thoughts on this would be much appreciated.

Spiderbill

I'm no expert, but there may be problems opening and managing a SIPP from another country.

However should that not be the case (or you return) then I would strongly argue that combining both pensions into a SIPP would reduce charges and increase flexibility.

I have recently transferred my Aviva pension to II for just such reasons, though I also have a SIPP with A J Bell (so still paying two lots of charges). One advantage of II is that they will hold foreign currency, which may help if you like foreign shares that pay dividends.

[spiderbill]

Thanks all for the replies. Given me a few things to think about.

I'm aware there may be problems opening a new SIPP given my current tax status, but wanted to first of all decide whether it would be a good idea or if other avenues were preferable before getting into the details of whether I can do it without returning to the UK. I'm hoping that the fact that I still have an address in the UK will make it easier but if not then I'll either need to choose another option or review my future residence plans.

As regards a complete consolidation rather than just moving the Sun Life pension, I hadn't really considered that and I will now. I've tended to spread my financial options around a bit up to now - some in self managed shares, some in ITs, OEICs, ETFs, as I'm aware that as circumstances change different strategies can rise and fall (e.g. IT's have been doing badly over the last year whereas they were doing well prior to that) so I was happy having some spread of management and while I haven't measured it exactly against alternatives I was fairly happy with the performance of the Scottish Widows pension. However a more thorough analysis would be a good idea.

I hadn't really thought about an annuity - the rates had been so poor for so long that it slipped off my radar - but with the higher interest environment we're in that is something I should have looked at and I will now. Also the situation at Sun Life may have changed slightly as I understand the UK division was sold this year so options may have changed and I need to get caught up with that.

So, lots to consider and your replies have helped clarify what I should be looking at.

Thanks again

Spiderbill

[scrumpyjack]

Also note that if you are tax resident in Slovenia, income and realised gains in your ISA will be taxable there. Other countries generally do not recognise ISAs as being sheltered from their tax.

[ursaminortaur]

I have slowly consolidated my pension schemes (sepárate from my employment pension arrangements) into Interactive Investor to save on fees, According to
the monevator site Interactive Investor is cheapest for "Unrestricted fund portfolios >£60k (£115k vs Vanguard)". When transferring into II their transfer office keeps you very much up to date via regular and informative messaging. Although others have reported issues with II I have found them a good company to deal with. I am a UK resident.

However I am aware that there is a general issue with "protection" regarding SIPPS in share trading companies ( like II), with the FSCS protection fixed at a maximum of £85k. Compare this with pensions held in companies that write "contracts of long-term insurance'" where the protection is unlimited. Something to mull over. I have accepted this risk on the basis that should a share dealing company go under and the government scheme tries to only compensate people to £85k the subsequent fall out would be huge.

Your shares should be held in trust in a separate company by any broker and shouldn't be accessible to creditors if the broker goes bust. Thus you shouldn't lose anything unless the failing broker commited fraud or was negligent - it should only be in those circumstances that the FSCS protection should be called upon. (Though there have been a couple of cases in the last few years where the administrators have tried to claim money from the clients because the failing brokers didn't have enough assets to cover their fees - in those circumstances the FSCS has stepped in and covered the administrator's fees. I'm not sure but think this is really a disguised case of negligence since I would have hoped that brokers would be required to have insurance so that if they went bust the administrator's fees at least would be covered - however I'm not sure whether that is legally required).

Hence if you choose one of the large reputable brokers for your SIPP then your funds should be safe and you shouldn't require the FSCS protection. However it is worth remembering that even though you might not lose anything you will likely lose access to those funds for a considerable time as things are sorted out by the administrators and the funds are transferred to some other broker.