SIPPs - Self Invested Personal Pensions |
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For
the independent investor
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As investors grow more sophisticated
and accumulate larger funds, many now demand a much
greater involvement in deciding where their money is
invested for their retirement years. In recent years
the facility to incorporate funds managed by different
investment managers within one pension portfolio has
been a requirement of many investors meeting the right
criteria. One solution that is currently very much in
vogue is the Self-invested Personal Pension Scheme,
or SIPP.
Attractive diversity
The diversity offered by a SIPP is particularly attractive
if you have a large pension fund and are considering
using pension fund withdrawal products after you retire.
Under the new concurrency rules, even if you are a member
of an occupational pension scheme you can still contribute
to a SIPP (including Stakeholder or Personal Pension
Plans) provided that you have the earnings which allow
you to satisfy the Inland Revenue limits on contributions
and you earn less than £30,000 per annum. For those
considering pension fund withdrawal, the most flexible
vehicle is likely to be a SIPP. Investments can be segmented,
which means that just part of the fund can be used for
pension fund withdrawal while the balance can be moved
around at will.
Benefits to business
A SIPP is particularly useful if an individual or partnership
wants to buy commercial property inside or outside the
UK from which to carry out business. Any borrowing must
be authorised and monitored by a scheme administrator.
Commercial property can be leased to a business. The
rent paid to the fund is tax deductible and the fund
receives the rent gross. Borrowing is possible and banks
will usually lend up to 70% of loan to value.
Transferring funds
If your income is high enough and you are about to retire
from a company with an occupational pension scheme,
you could transfer funds to a SIPP before taking any
benefits. The balance of the money could then be invested
according to your own needs.
On death, the tax position basically depends on whether
you have started pension fund withdrawal or not. If
there has been no pension fund withdrawal, the fund
can be distributed in most circumstances to the chosen
beneficiaries free of inheritance tax.
Special tax charge
There is a special tax charge of 35% on the fund if
the surviving spouse elects to take this as a lump sum.
Spouses can take a pension from the fund after the member's
death and can then nominate further beneficiaries to
receive the remaining lump sum. The age at which this
flexibility ends is 75 for the surviving spouse or when
the original policyholder would have reached 75, whichever
is the sooner.
If you would like to find out more about how you
could benefit from investing via a SIPP or if you would
like to review any part of your retirement provision,
please e-mail
or
contact us for further information. |
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Investment
choices
- Stocks and shares traded on any recognised stock
exchange, including equities, fixed-interest securities
issued by governments or other bodies, debenture
stock and other loan stock, warrants (for equities),
pension investment bonds, convertible securities
- Unit trusts, OEICs
and investment trusts
- Insurance company managed
funds and unit-linked funds
- Endowment policies
traded on a recognised market
- Deposit accounts with
an authorised institution in any currency
- Commercial property,
including land - whether inside or outside the
UK
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The past
is not necessarily a guide to future performance.
Levels and bases of, and reliefs from, taxation
are subject to change. Tax reliefs referred
to are those currently applying and their value
depends on the circumstances of the individual
investor or fund involved. The value of the
units in these investments, as well as the income
from them, can fall as well as rise. These investments
are intended as long-term investments. If you
withdraw from these investments in the early
years, you may not get back the full amount
invested
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