Self-Invested Personal Pensions (SIPPs) have been around since 1989, but after the introduction of Pension Simplification legislation on 6 April 2006, they\u2019ve become more accessible.<\/p>\n
If you would like to have more control over your own pension fund and be able to make investment decisions yourself with the option of our professional help, a SIPP could be the retirement planning solution to discuss with us.<\/p>\n
What is a SIPP?<\/strong> Individuals have to appoint a trustee to oversee the operation of the SIPP, but having done that the individual can effectively run the pension fund on his or her own. How much can I contribute to a SIPP?<\/strong> Most people under 75 are eligible to contribute as much as they earn to pensions, including a SIPP (effectively capped at \u00a3255,000 each tax year). For instance, if you earn \u00a350,000 a year you can contribute up to \u00a350,000 gross (\u00a340,000 net) into all your pension plans combined in the 2010\/11 tax year.<\/p>\n If your total annual income has reached \u00a3130,000 since April 2008, you may experience further restrictions on the amount you can contribute and obtain higher or additional rate tax relief.<\/p>\n The earnings on which you can base your contribution are known as Relevant UK Earnings. If you are employed, this would generally be your salary plus any taxable benefits. If you are self-employed, this would normally be the profit you make (after any adjustments) for UK tax purposes.<\/p>\n Even if you have no Relevant UK Earnings, you can still contribute up to \u00a33,600 each year to pensions. Of this the government will pay \u00a3720 in tax relief, reducing the amount you pay to just \u00a32,880.<\/p>\n Even if you have no Relevant UK Earnings, you can still contribute up to \u00a33,600 each year to pensions. Of this the government will pay \u00a3720 in tax relief reducing the amount you pay to just \u00a32,880.<\/p>\n Can I transfer my existing pension to a SIPP?<\/strong> If you have had an annual income of \u00a3130,000 or more since April 2007 and make regular contributions to a pension, changes announced in the 2009 Budget could affect you. Switching regular contributions to a new pension may mean future regular contributions are subject to a \u00a320,000 limit.<\/p>\n A SIPP will typically accept most types of pension, including:<\/strong><\/p>\n – Stakeholder Pension Plans Where can I invest my SIPP money?<\/strong> With a SIPP you are free to invest in:<\/strong><\/p>\n – Cash and Deposit accounts (in any currency providing they are with a UK deposit taker) Once invested in your pension the funds grow free of UK capital gains tax and income tax (tax deducted from dividends cannot be reclaimed).<\/p>\n Why would I use my SIPP to invest in commercial property?<\/strong> If you own a business and decide to use the property assets as part of your retirement planning, you would pay rent directly into your own pension fund rather than to a third party, usually an insurance company. What are the tax benefits of a SIPP?<\/strong> When can I withdraw funds from my SIPP?<\/strong> If you die before you begin taking the benefits from your pension the funds will normally be passed to your spouse or other elected beneficiary free of Inheritance Tax. Other tax charges may apply depending on the circumstances.<\/p>\n What else do I need to know?<\/strong> A pension wrapper that offers more freedom of choice Self-Invested Personal Pensions (SIPPs) have been around since 1989, but after the introduction of Pension Simplification legislation on 6 April 2006, they\u2019ve become more accessible. If you would like to have more control over your own pension fund and be able to make investment decisions yourself… Read more »<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"_links":{"self":[{"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=\/wp\/v2\/posts\/1139"}],"collection":[{"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1139"}],"version-history":[{"count":0,"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=\/wp\/v2\/posts\/1139\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1139"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1139"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.suretyfp.com\/wordpress\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1139"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nA SIPP is a personal pension wrapper that offers individuals more freedom of choice than conventional personal pensions, however they are more complex than conventional products and it is essential you seek expert professional advice.
\nThey allow investors to choose their own investments or appoint an investment manager to look after the portfolio on their behalf.<\/p>\n
\nA fully fledged SIPP can accommodate a wide range of investments under its umbrella, including shares, bonds, cash, commercial property, hedge funds and private equity.<\/p>\n
\nMany SIPP providers will now permit you to set up a lump sum transfer contribution from another pension of as little as \u00a35,000, and while most traditional pensions limit investment choice to a short list of funds, normally run by the pension company\u2019s own fund managers, a SIPP enables you to follow a more diverse investment approach.<\/p>\n
\nBefore transferring to a SIPP it is important to check whether the benefits, such as your tax-free cash entitlement, are comparable with those offered by your existing pension. Make sure, too, that you are aware of any penalties you could be charged or any bonuses or guarantees you may lose.<\/p>\n
\n– Personal Pension Plans
\n– Retirement Annuity Contracts
\n– Other SIPPs
\n– Executive Pension Plans (EPPs)
\n– Free-Standing Additional Voluntary Contribution Plans (FSAVCs)
\n– Most Paid-Up Occupational Money Purchase Plans<\/p>\n
\nYou can typically choose from thousands of funds run by top managers as well as pick individual shares, bonds, gilts, unit trusts, investment trusts, exchange traded funds, cash and commercial property (but not private property). Also, you have more control over moving your money to another investment institution, rather than being tied if a fund under-performs.<\/p>\n
\n– Insurances company funds
\n– UK Gilts
\n– UK Shares (including shares listed on the Alternative Investment Market)
\n– US and European Shares (stocks and shares quoted on a Recognised Stock Exchange)
\n– Unquoted shares
\n– Bonds
\n– Permanent Interest Bearing Shares
\n– Commercial property
\n– Ground rents in respect of commercial property
\n– Unit trusts
\n– Open ended investment companies (OEIC)
\n– Investment trusts
\n– Traded endowment policies
\n– Warrants
\n– Futures and Options<\/p>\n
\nInvesting in commercial property may be a particularly useful facility for owners of small businesses, who can buy premises through their pension fund. There are tax advantages, including no capital gains tax to pay, in using the fund to buy commercial property.<\/p>\n
\nOrdinarily, a business property will, assuming that its value increases, generate a tax liability for the shareholders or partners. Unless, that is, you sell the property to your SIPP. Then the business can pay rent to your pension fund, on which it pays no tax, and any future gain on the property will also be tax-free when it is sold.<\/p>\n
\nThere are significant tax benefits. The government contributes 20 per cent of every gross contribution you pay \u2013 meaning that a \u00a31,000 investment in your SIPP costs you just \u00a3800. If you\u2019re a higher or additional rate taxpayer, the tax benefits could be even greater. In the above example, higher rate (40 per cent) taxpayers could claim back as much as a further \u00a3200 via their tax return. Additional rate (50 per cent) taxpayers could claim back as much as a further \u00a3300.<\/p>\n
\nYou can withdraw the funds from your SIPP between the ages of 55 and 75 and normally take up to 25 per cent of your fund as a tax-free lump sum. The remainder is then used to provide you with a taxable income.<\/p>\n
\nYou cannot draw on a SIPP pension before age 55 and you should be mindful of the fact that you\u2019ll need to spend time managing your investments. Where investment is made in commercial property, you may also have periods without rental income and, in some cases, the pension fund may need to sell on the property when the market is not at its strongest. Because there may be many transactions moving investments around, the administrative costs are higher than those of a normal pension fund.<\/p>\n","protected":false},"excerpt":{"rendered":"