SIPPS
From the 1st October 2008 the government removed the restriction on placing accumulated Protected Rights funds into a SIPP (self invested Personal Pension Plans). For many people this eliminates one of the last remaining reasons to favour a personal pension over a SIPP.
Since SIPPS will allow protected rights to be paid out in a variety of ways that may not be available via original insurance company arrangements (such as unsecured pensions and alternatively secured pensions) this makes SIPPS even more attractive.
In simple terms, a self-invested personal pension puts the investor in control of their pension planning.
In its simplest form, a SIPP allows an investor much greater access to the investments markets. This a good thing since historically unit trusts have outperformed the average pension fund by over 50% because they can access the whole marketplace rather than being tied to only pension funds.
In the current difficult financial markets it is essential to have the maximum amount of flexibility when planning for retirement.
SIPPS have been around since 1989, but after the introduction of Pension Simplification legislation in 2006, SIPPs have become very popular with more expat and local investors.
(Compare this to QROPS which are very new and appear to be under pressure from HMRC to tone down their perceived benefits, almost monthly a new restriction is added to make the concept of QROPS less attractive-for this reason SIPPS is a credible, cheaper and more tested solution)
With a SIPP you are free to invest in:
- Unit Trusts
- OEICs
- Investment Trusts
- Insurance Portfolio Bonds
- UK Gilts
- UK Shares
- US & European Shares
- Bonds
- PIBS
- Cash & Deposit Accounts
- Commercial Property
The most important thing to remember is that the range of available investments depends largely on the
choice of SIPP provideprovider. Ultimately it is down to the trustees of your pension plan to agree whether they are happy to accept your investment choices into the SIPP. After all, the trustees are responsible and liable for ensuring that the investment choices fall within their remit. Credenda Associates have access to very well established providers with a wide choice of fund options.
Choosing a SIPP Provider
Historically SIPPs had high entry levels and couldn’t accept protected rights, this has changed drastically in the last two years. Now people can place their protected rights in the scheme and the product providers are doing more business and therefore fees have fallen too. Clearly the larger the fund size the greater the scope of flexibility in investment choices.
As a general guide, if your pension funds total above £35,000 we can provide an attractive solution.
We offer a range of insurers that provide a cost effective and flexible SIPP that would allow for a reasonably comprehensive range of investments.
For the larger pension funds over £250,000 a more bespoke trustee based SIPP may be required which would allow access to the whole range of SIPP investments, again Credenda Associates can provide this for you.
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