Self-invested personal pension (SIPPs)
At Falcon International Estates we look to introduce investment opportunities to sophisticated investors. We look at diversifying client’s portfolios and give them the opportunity to utilise funds locked away in any deferred pensions they may hold.
With volatility in the financial markets investors are now looking at alternative methods and taking charge of where the money in their deferred pensions is invested. This can be done through what is known as a Self-Invested Personal Pension (SIPP). This pension scheme allows individuals to decide which investments they choose to invest their pension funds in providing the investment is an approved product by the pension provider.
In essence a SIPP is a type of Personal Pension Plan and is a tax “wrapper”, which allows tax rebates on contributions in exchange for restrictions on access to the fund. The HMRC rules permit a wider range of investments to be held than Personal Pension Plans, particularly equities and real estate. Rules on contributions, withdrawal benefits etc are the same as with other personal pension schemes.
More investment choice
With a SIPP Investors can make choices about what assets are bought or sold and can also decide how and when those assets are acquired or disposed of, subject to the agreement of the SIPP trustees which is usually the SIPP provider.
Any considered asset must be permitted by HMRC and some will be subject to tax charges.
The structure
Unlike conventional personal pensions where the provider as trustee has ownership and control of the assets, in a SIPP the member may have ownership of the assets (via an individual trust) as long as the administrator of the scheme is a co-trustee that can exercise control. In reality most SIPP’s do not work this way and simply have the provider as SIPP trustee. Where that is the case the role of the scheme administrator is to control what is happening and to ensure that any tax approval requirements continue to be met.
The pensions industry has leaned heavily towards three industry terms to describe generic SIPP types:
- Deferred. This is effectively a Personal Pension Plan in which most or all of the pension assets are generally held in insured pension funds (some providers may offer direct access to mutual funds). Self-investment or income withdrawal activity is deferred until an indeterminate date, hence the name. In some newer schemes of this type, there are over 1,000 fund options, so they are not as restrictive as they once were.
- Hybrid. A scheme in which some of the assets must always be held in conventional insured pension funds, with the rest being able to be 'self-invested'. This is deemed as the common offering from mainstream personal pension providers, who require insured funds to be used to some extent to derive their product charges.
- Pure or Full. Schemes offer unrestricted access to lots of acceptable investment asset classes.
The first steps
The debate on pensions seems to be in the news more frequently then ever before and it is a subject that receives plenty of attention. To help give our clients a clearer understanding of their pensions we offer a free pension valuation, which is carried out by an authorised Independent Financial Advisor.
This is a simple process where the client signs a letter of authority which authorizes the financial advisor to contact the existing pension provider to get a current valuation. The pension provider then passes this information back to the financial advisor who then feeds this back to the client.
Once the Financial Advisor has obtained the valuation he is then in a position to discuss the options available with regards to creating a SIPP and transferring the funds into that SIPP from a deferred pension. The Financial Advisor will also discuss the products accessible for investment thus giving the client choice and freedom to invest previously inaccessible funds into an investment of their choice.
If you would like to register your details for a free pension valuation please complete your details below or call
+44 (0) 20 7850 8060.
Request your FREE pension valution now!
Falcon International Estates
