FAQs
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- What are SIPPs?
A self invested pension plan (SIPP) is a pension plan that you have control over and therefore offers a great amount of flexibility. A SIPP allows you to choose from a number of different investments unlike other personal pension schemes. You may also hear a SIPP called a wrapper and this is because any investments that you have within this wrapper are treated a certain way.
One of the main benefits of a SIPP is that they have the same tax advantages as other personal pension plans.
A SIPP is suitable if:
- You are looking for flexibility and control of investment
- You are looking for flexibility of drawing benefits
- You are looking for bespoke advice
- You are willing to accept a higher level of investment risk
- You are willing to accept a higher level of charges
A SIPP is suitable if:
- Single people
- Couples with spouses or dependents
- Deferred decision on retirement and death benefits
- Is a SIPP suitable for me?
The cost will depend upon the type of SIPP that you require.
The minimum annual charge for an SIPP starts from £250 (£350 for protected rights) plus VAT..
Additionally there is also an initial one-off set-up charge which starts from £250 plus VAT..
Any extra charges may apply since the figures quoted above are minimum charges only. However any further charges will be fully explained and agreed before proceeding with the purchase of a SIPP.
- How much does a SIPP cost?
The cost will depend upon the type of SIPP that you require.
The minimum annual charge for an SIPP starts from £250 (£350 for protected rights) plus VAT.
Additionally there is also an initial one-off set-up charge which starts from £250 plus VAT.
Any extra charges may apply since the figures quoted above are minimum charges only. However any further charges will be fully explained and agreed before proceeding with the purchase of a SIPP.
- Can SIPPs buy private equity?
Simply put, yes. Current legislation does allow for the purchase of private equity.
Some providers that SIPPs.org.uk work with will allow a full investment structure in line with HMRC rules.
SIPPs.org.uk do not restrict clients in investments.
- How do I draw my income?
There are several options to do so under a SIPP wrapper.
The three main ways for you to draw your income are:
- Unsecured income in which income is drawn directly from an investment fund in a SIPP.
- Annuity secured income by purchasing annuity from an insurance company.
- The Third Way which is a combination of the above two options.
Given the possible positives and negatives combined with the complexity of options, it is always best to seek independent bespoke advice
- Do you charge for your service?
Yes, there is a charge for the time spent. This is a fee-based service which will be agreed by both parties prior to any arrangement, purchase or investment.
As with any bespoke service, charges are agreed and disclosed prior to selecting ourselves to act on your behalf.
- Whats the difference between a sipp and stakeholder pension?
Both are classed and Personal Pension Plans and have the same rules regarding tax relief and contributions. However stakeholder pensions are more basic, they can accept payments of as little as £20pm and have a maximum annual charge of 1.5%. Investment choices are limited to about 20 fund managed by the pension provider.
Sipps offer a far more extensive list of investments and greater flexibility and control. Investments are not limited to funds and also include, but this is not limited by, shares, bonds, gilts, investment trusts, cash and commercial property. Each sipp is different and at sipps.org.uk a partnered dedicated case manager is allocated to help build the right sipp for you.
- Can I invest in residential property?
No, although original legislation did allow for the purchase of residential property this has effectively been stopped. However it is possible to investment in commercial property depending on your available funds.
- What are the death benefits of using a sipp?
In the event of your death your fund would normally be paid to your beneficiary as a tax free lump sum.
- Will I still have to purchase an annuity?
With a sipp there are various options open to you when you reach retirement age. You can choose to take a tax free lump sum of 25% and the rest can either be used to purchase an annuity as a form of secured income or you can opt for income draw down whereby you draw an income from your fun on a annual, half yearly, quaterly or monthly basis.
- What is the life time allowance for pension contributions?
The lifetime allowance for pension contributions is the maximum amount of payment that can benefit from tax relief. It applies to the total balance of all pension schemes held by an individual. For the tax year 2010/11 the life time allowance is £1.8 million.
- What happens to my sipp when I die?
If you die before drawing any benefits from you sipp then the money will be paid out as an inheritance tax free, lump sum to your elected beneficiary. If the holder has already drawn from the sipp then tax will be charged and the remaining portion will be paid to beneficiaries.
- Why choose a SIPP?
The major advantage of a sipp is the increased control and flexibility over your investments. Unlike a conventional pension scheme, where you have no control over where you money is invested, a sipp offers a wide range of investment options. This includes commercial property.
Sipps also offer considerable tax benefits and allow investors to bring all of their pension schemes and investments together in one tax efficient wrapper.
- Can I transfer property into my sipp?
No you cannot transfer property you already own into your sipp but you can use your sipp to buy this property. A sipp can borrow up to half the fund value it already holds to purchase commercial property.