Self invested personal pensions or SIPP s are another form of pension.  These are quite the opposite of a Stakeholder pension.  Rather than having a minimum standard that they have to abide by, they are extremely flexible. Because of this, they can be more expensive so it is important to ensure that you are using, and need the extra benefits.

A SIPP often has a much wider investment choice than an individual can utilise within a personal pension.  Personal pensions and Stakeholder pensions generally utilise collective investment funds to help savers make their money grow.  These funds bring peoples savings together and allow the investment manager to buy shares in companies on mass.  By bringing funds together it allows savings to be placed in a diverse portfolio.

Certain people require a greater amount of investment options when building their retirement fund and may wish to utilise a SIPP.

Here are some different types of investment that you could invest in via a SIPP.

  • Unit Trusts/OEICS/Investment Trusts
  • Direct Stocks and Shares
  • UK Real Estate Investment Trusts
  • Depositary interests
  • Discretionary Fund Management
  • Insurance Company Managed Funds
  • Deposit Accounts
  • Structured Products
  • Exchange Traded Funds
  • National Savings & Investments
  • Commercial Property
  • Annuities

Through a SIPP you can also borrow up to 50% of the schemes net assets.  This can be useful when looking to purchase a commercial property through the SIPP.  In this instance the received rent goes towards repaying the mortgage and building up funds within the pension.  Any rental income received by the SIPP is tax free.

Small Self Administered Scheme (SSAS)

Small Self Administered Schemes or SSAS are another form of flexible pension that allow a wide investment choice.  SSAS’s are typically set up by an employer for company owners.  They are similar to a SIPP however they have a few differences.

Here are some of the differences:

Control The SIPP provider is traditionally a financial house, such as a bank, building society, insurance Company. However, this was extended by the FCA The employer usually acts Scheme provider. A business such as a limited company or partnership may be the scheme provider
Regulation SIPP regulated by the FCA SSAS regulated by The Pensions Regulator
Ownership of Investments The investments are registered in the name of the SIPP company. The investments are registered in the name of the Trustee, who will also be the scheme members.
Investment Choice Investment choice is dictated by rules of the SIPP Investment choice is dictated by the member trustees
Loans No. Yes, up to 50% of the assets of the scheme to an Employer. 1st charge security Required. No limit for unconnected parties
Payments Basic rate tax relief claimed at source. Higher rate through tax return Full tax relief at source
Investment Allocation Operates on a master trust Investments do not need to be allocated amongst the members, as a common trust principle applies
Allocation of Payments Contributions are outlined at the start. Contributions do not need to be outlined at outset.

It is important to ensure the assets you invest in via a SIPP, or SSAS are suitable for your situation.  If you would like to speak with an advisor then please feel free to contact us for a free chat.


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