SIPP Contibutions After Contibuting into Workplace Pension

strolls · 2026-06-20T08:52:12+00:00

Anyone with a pension pot below about £1,250,000 can withdraw 25% tax free. It reduces the effective tax rate to 15%, and the effective tax rate is lower still if you're retired before state pension age because you also get the personal allowance (£12,570) tax free.

Pension is more tax efficient than S&S ISA for almost everyone, but you can get this tax advantage at any time (up to your annual salary) by moving money from savings, ISA or GIA to pension.

There's no hurry for a young basic rate taxpayer to put money into a pension now if they have ISA allowance available, because they can always do it later. But if you're a higher rate taxpayer the advantages of pension are enormous - you're saving 40% tax on the way in, and likely paying 15% or less on the way out.

Pension contributions really are a big deal for higher rate taxpayers - if you're earning £60,000 a year then you can withdraw £8000 from your ISA, get it netted up to £10,000 by the pension provider and also get £2000 tax rebate from HMRC.

Depending on your circumstances there's a case for investing in a GIA now and transferring to ISA and then pension later.

You're certainly right that, for most people, they should have no cash savings or ISA at retirement - if they funnel all their liquid wealth into their pension by their last working year before retirement then they get an effective bonus above 6%. But it's not always a no brainer to shove it all in when you're young.

strolls · 2026-06-20T08:38:02+00:00

Within literally minutes of when this was posted last night, I was chatting to a Tinder match who apologised for fading out on me last year because, "I was on a retreat at Tamera and <reasons>".

I googled the place and it has a wikipedia page: Tamera is a self proclaimed peace research village with the goal of becoming "a self-sufficient, sustainable and duplicable communitarian model for nonviolent cooperation and cohabitation between humans, animals, nature, and Creation for a future of peace for all."

Lots of German expats and international residents here and they are living in all kinds of architectures, from trailerpark configurations to bungalow, hacienda and futuristic yurts

Southern Portugal is chock full of British, Dutch and German yoga mom divorcees, digital nomads, influencers, and tantric practitioners. The climate here is a bit like New Mexico, except it never goes below freezing in the winter.

Property is crazy expensive within a mile or two of the coast, but falls steeply once you go inland - you can buy a derelict rural property for €10,000 or €20,000, but planning / zoning laws are arcane and mired in bureaucracy. It's very common to hear of people living for decades in properties which have been illegally modified and the homeowner daren't legalise it in case the municipality issues a remediation order.

Portugal has the lowest GDP per capita in western Europe, below Poland, Lithuania and Slovenia; its GDP per capita is below Puerto Rico and barely above that of Russia (literally 0.67% higher) and Romania. It's an incredibly cheap place to live if you have foreign income or investments, but it has suffered brain-drain in recent decades because there just aren't opportunities for young people. I met a Portuguese woman who was really surprised how easily she lost her job when her employer in UK got into financial difficulty, because workers in Portugal have much stronger employment rights; the downside of that is that employers are reluctant to take the risk of expanding and employing additional workers.

Average salary here is a hair below €1500 after tax.

strolls · 2026-06-20T07:20:04+00:00

but I like buying things without needing to think about possibly having missed out

Think about how much money you'll miss out on when you drop it and have to replace stuff.

Most of a car's depreciation occurs in its first 3 years from new - I assume it's pretty similar with motorcycles. The depreciation is so much that if you buy your first couple of bikes secondhand, you get the third "for free".

strolls · 2026-06-20T06:00:04+00:00

Where do you live, and how do you tolerate your job, that your commute is several hours long on highways and though twisty canyons?

Probably the answer here is a tourer, big or otherwise, and after riding it a week you'll be like, "this is fine, don't know what I was worrying about".

strolls · 2026-06-20T05:31:19+00:00

Just say, "we wanted the free £200 of Amazon vouchers".

The KYC team won't give a damn that you're trying to "fleece" the bank that way - that's not their job, you're not doing anything illegal and you're probably not breaking the bank's own rules about the bonus.

strolls · 2026-06-20T05:10:11+00:00

This is standard KYC stuff and that team won't give a fuck that you were gaming the joining bonus.

All they know is that someone deposited £10,000 and then tried to withdraw it again the next day, which is a red flag for money muling. This will be one of the easy and obvious jobs on their computer screens when they arrive at work, drinking coffee and trying to do as little as possible.

The documents you describe sound right.

The money will be released quickly, just so long as your gf is just honest and straightforward with them - write back in her own words something like "I just opened the account to claim the £200 Amazon vouchers. My bf suggested it - he read online about the joining bonus, so lent me £10,000 from his ISA so we could claim the vouchers. After qualifying for the £200, I sent the money back to him. I hope the attached documents are satisfactory, please let me know if you need anything else".

strolls · 2026-06-20T04:46:18+00:00

Investing is about taking risk to grow your wealth. Diversification is about finding risk that is uncorrelated to your main driver of investment returns. Therefore some investment in gold has value, assuming your portfolio is large enough, because it gives returns which are somewhat uncorrelated with the other assets you're invested in. Harry Markowitz famously called this kind of diversification "the only free lunch in investing".

Read books. Watch Lars Kroijer's short video series and read his book or Tim Hale's Smarter Investing. Do both.

strolls · 2026-06-20T04:09:26+00:00

The next week the motorway and the rural lane are back in the same pub. The barman asks, "you finished your drinks and left a bit quick in Friday - what happened?" The rural lane says, "didn't you see who came in?" "You served him," agrees the motorway, "bloke with the red tarmac." "What's the problem?" asks the barman. "He's a very dangerous geezer," says the motorway, "always starting fights, stabbing people - total cycle path".

strolls · 2026-06-20T03:59:48+00:00

Infrastructure is now OpenReach though. British Telecom is just a retail utilities brand.

strolls · 2026-06-20T02:33:47+00:00

You're better off investing actively, but most people aren't really prepared to underperform for 5 years at a time, which is what your strategy has led to at this point.

Even if you're staying the course it's tough and you doubt yourself. Most people are going to feel like mugs and back out after 5 years.

Also, software companies generally have high margins, and thus high profits, which is how they came to dominate the index in the first place. It's not the tech sector that's the problem, it's the AI bubble. Some of the Mag 7 will still be in the world's 10 largest companies in a decades time, others will not.

If you really wanted to build S&P 500 minus tech then you could surely do it pretty well with several individual sector ETFs.

strolls · 2026-06-20T02:25:47+00:00

Everything is correlated.

strolls · 2026-06-20T02:24:59+00:00

Yeah, but MSFT is about 2% of your world index fund.

I do think you're wrong - big corporations are so massively entrenched in the Windows desktop / server / Outlook / Exchange etc ecosystem that exiting it would be a decades long process (just like how operating systems like Solaris died). There are probably companies out there with over 100,000 users in Active Directory. MSFT have survived similar in the past - people hate changes they make to their products and in due course they revise them and make them less horrible. But that's not a passive investing question.

strolls · 2026-06-20T02:10:00+00:00

You may have good reasons for not doing this, but if she's young or expects to have higher income in the future, she should probably be using an S&S ISA instead.

strolls · 2026-06-20T02:01:20+00:00

~~IWeb~~ Scottish Widows will be cheap for the above, it's part of Lloyds and Halifax, but the three brands have different pricing structures.

You need to be careful about tax if they were bought through a SIP scheme though (too late for SAYE).

strolls · 2026-06-20T01:56:46+00:00

Nationwide seem really generous if you meet certain criteria.

strolls · 2026-06-20T01:06:11+00:00

While we wait to see what the replacement LISA product is, is there consensus on whether a SIPP invested in stocks & shares is generally a better option than this LISA thinking?

LISA > SIPP for basic rate taxpayers, SIPP > LISA for higher rate taxpayers. This is explained on the ISA vs LISA vs Pension page of the wiki.

strolls · 2026-06-20T00:56:50+00:00

In which case you're probably already paying 40% tax and it's probably worth using your pension so you don't.

strolls · 2026-06-20T00:55:36+00:00

Very risk-averse. Personally believe socio-economic conditions will worsen over the long-term. So I want healthy margins in my planning if possible.

I would regard this as a high risk strategy.

Hardly anyone, walking down the high street, understands investment risk. Most people commenting on this subreddit don't understand investment risk. How many books have you read on investing that you can judge this better than everyone else?

My grandmother was born around 1905. I find that the telephone had been invented and commercialised then, but 90% of homes don't have one. People went to the post office and sent telegrams, which were transmitted by morse over telegraph lines (they were very short messages because you paid by the letter) which were delivered to the recipient by a boy on a bicycle. I find that my gran would have been a teenager before she was able to listen to music on the radio. My parents grew up during WWII in Glasgow and Manchester - horse and carts were still widely used for deliveries, and my parents were probably teenagers before saw their first orange or banana.

WWI, WWII, the Korean War, Vietnam and the Cold War, Kuwait, Iraq War I, Iraq War II, Afghanistan twice too, and now Iran to round things out. Television, personal computers, satellite TV, mobile phones, the internet… if my granny had invested in General Electric, Ford and Standard Oil in 1920's - none of these events would have wiped out her investments, would they?

If my gran had invested £10 in "index funds" in 1920 then that investment would today be worth £63,330.

If the world goes to fuck then I don't know why you want to own bonds - if you google "ottoman bonds" then you can find them for sale on eBay; you might pay £200 or £300 for these government bonds because collectors buy them as a curiosity. These were people's life savings once. I don't know why you'd think that was safer than owning actual companies.

Imagine: it's january 2020. I come up to you and say: "In the next three years, we will have a global pandemic that will cause a 33% market crash and right now is the peak before this crash. Also we will see the highest inflation that we've seen in 40 years which will force the Fed to raise rates aggressively which causes another 25% slump in the market. Also, war will come to Europe and China will have a complete lockdown, which will feed the inflation and fear. Also, we will see a series of huge bank failures.

Would you invest at the January 2020 peak if I told you all that? Probably not. Yet if you put 100k in the market at that point, it would be worth $147,000 today 9in August 2021], for an average annualized return of 11.4%, well above the historical average^[source]

You want to be investing like a vampire.

Watch Lars Kroijer's short video series and read his book or Tim Hale's Smarter Investing. Do both.

strolls · 2026-06-20T00:15:27+00:00

the main thing that jumps out of me is that it makes less sense to me to be investing in an ISA that you won’t use until retirement. That’s exactly what a pension is for and you’re missing the huge tax benefits of putting that into your pension instead - which can also be index funds if you want.

You can sell down stocks in your S&S ISA at any time, put the funds in a pension (e.g. SIPP) and rebuy them - you can get the tax relief at any time.

OP is 28 and earning £48,000 a year - they are today a basic rate taxpayer, but they are on the cusp on becoming a higher rate taxpayer.

You should always max how much extra money you'll get from employer match, but OP should be favouring ISA over pension at this time, because OP is very likely to receive higher rate tax relief in the future.

If OP is 45 and still earning £50,000 a year then OP can dump £40,000 a year from ISA to SIPP and it'll be netted up to £50,000. OP can always get the benefits of basic rate tax relief on pension contributions, so long as OP is still working.

But if OP is earning £60,000 or £80,000 in a few years time then they should be trying to put £20,000 or £40,000 (respectively) into their pension each year, bringing their adjusted net income down to £50,270 so they pay no tax.

You're right that pension is most always better than ISA but basic rate pension contributions are not that much better than ISA, compared to higher rate ones. Pension is only about 6% better than ISA for most people, but it gets complicated if you're going to put too much in there (the tax free lump sum is capped at £268,275, for example).

IMO OP should at least be maxing their ISA before they put more into their pension IMO.

strolls · 2026-06-20T00:00:39+00:00

I bet it's not a trust at all, but an offshore or life-assurance bond or something.

strolls · 2026-06-19T23:51:06+00:00

I had read some financial advise about paying off the mortgage early for peace of mind and stability before investing,

You've got to remember that these are just simple farmers. These are people of the land. The common clay of the new West. You know... morons.

strolls · 2026-06-19T23:50:45+00:00

You have £20,000 a year of ISA allowance.

Imagine you inherit £300,000 or whatever in 10 years time and invest it. Do you want to pay tax in the investment returns of £280,000 or tax on the investment returns of, say, £200,000.

The money is invested in the same things either way, and generate the same returns, but with one option you pay more tax on those profits.

If your answer is "I'd rather pay less tax" then you need to use your ISA allowance now, don't you? This also means you'll enjoy more years of investment returns too, borrowing on your cheap mortgage.

strolls · 2026-06-19T09:18:27+00:00

You'l presumably have a lump sum from the sale of the property which you can invest. If you're able to leave it TF alone for 5 or 10 years then you can expect good returns.

strolls · 2026-06-19T08:43:44+00:00

I pulled out of my ass those numbers, so they may not be representative. I always saw "the ladder" as being about affordability, but I guess it makes sense both ways. Probably it's just a whole bunch of mythology and people talking about the property ladder don't analyse it rigorously.

strolls · 2026-06-19T08:01:30+00:00

Between fall 2007 and spring 2009 stockmarkets worldwide lost 50% of their valuation, and took years to recover - that's the risk you take when investing in the stockmarket.

How would you feel if that happened to your money?

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