Key Features of a SIPP
A Self Invested Personal Pension (SIPP) does what it says on the tin. It is a pension that allows you and your adviser to make decisions about where you invest your pension savings. So instead of leaving it to somebody else to manage your pension fund, you and your adviser take control.
SIPPs are set up as trusts, separating pension funds from other assets for Inheritance Tax purposes.
Key Features of a SIPP
Consolidation |
Very often advisers will recommend a SIPP as a means of getting past pension funds in one place so they can be managed in a more considered way. Because a SIPP maintains an up to date record of a pension portfolio, your adviser will be able to more clearly analyse investment results and recommend adjustments to your portfolio. |
Tax Relief |
A SIPP administrator will claim basic rate tax relief on your behalf and add it to your fund to ensure you benefit from the Government incentive for saving into a pension. Higher rate tax payers will need to claim the difference through their Self Assessment Tax Return. |
Discounted Trading |
Using what is sometimes called a trading platform or fund supermarket a SIPP provider may set up arrangements with fund managers and stockbrokers to provide advisers with the facility to buy and sell investments of all types. Through negotiation, SIPP providers are often able to offer you significantly reduced fund charges compared to those available to retail investors. |
Commercial Property |
One of the great advantages of SIPPs is that they allow a wide range of investment types including direct investment in commercial property, allowing you to put any business premises and rental income from it into your retirement savings. |
Taking Benefits |
A SIPP will enable you to draw down an income from the fund you have built up or transfer all or part of your fund to an annuity provider to purchase a regular income. Also, it may be possible to take a proportion of your fund as a tax-free cash sum whilst the remaining fund continues to benefit from being invested. |
Different SIPPs for different needs
As you might expect, not all SIPPs are the same. There are a number of aspects your financial adviser will take into account when deciding which one to recommend.
- Fees charged for setting up and administering your account
- Fees for the different functions performed such as trading, managing property purchases or taking an income
- The discounts negotiated for the trading platform
- The choice of investments types and range of funds it will accept
- The reputation of a SIPP provider for efficiency and service
- Whether a discretionary management service is allowed within a SIPP
- Advanced online management available to speed up access and investment transactions.
Not everyone will want to invest in complex or specialist assets or trade on a regular basis and those who don’t may get better value from a simpler version with less choice and lower fees.
For those with larger portfolios and who plan to be very active in controlling their fund, they may be better served by a more comprehensive choice of investments and no trading fees but at a higher annual cost.
Thinking of opening a SIPP? The James Hay Partnership stands out for their choice and flexibility, simple transparent charges and expert administration it offers as well as total independence.
James Hay offer two types of SIPP:
The Partnership SIPP is a fully bespoke, whole of market pension offering the widest possible range of investments. Enabling financial advisers to access the full range of investment opportunities permitted by HM Revenue & Customs, together with maximum flexibility on retirement. From collective investment schemes, stocks and shares through to more complex assets such as unquoted shares, gold bullion and commercial property with the added flexibility to appoint a third party stockbroker or investments manager at no additional fee from James Hay.
This is James Hay Partnership’s online pension which enables users to establish, monitor and manage the SIPP via our secure website, James Hay Online. Designed with the Retail Distribution Review (RDR) in mind financial advisers can choose from 1,800 discounted collective funds via the James Hay Investment Centre platform, a panel of Investment Managers and a panel of cash providers as well as an exclusive online investment terminal integrated into the web service which is powered by Selftrade. The Selftrade online investment service offers access to any major stock exchange in Europe and North America as well as access to exchange traded funds, gilts, corporate bonds, iShares and a range of derivatives. All this is available with no set-up charges and a flat annual charge of just £180.
If you wish to find out more about the James Hay Partnership SIPP or iSIPP, please visit the literature section.
Points to consider
A SIPP may not be suitable for all investors and if you are in any doubt you should consult your financial adviser. James Hay Partnership is not authorised to give financial advice. If you do not already have a financial adviser, information can be obtained from http://www.unbiased.co.uk/
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For more information on the risks associated with SIPPs, please read our guide; SIPPs & Wraps: assessing the risk.
Tax Risk Warning
Current pensions legislation and HMRC practice could change in the future. This may affect the pension benefits you receive from the plan. In addition, your individual circumstances will impact the tax treatment of your pension and may also be subject to change in the future.
Capital at Risk Warning
The value of your SIPP will be determined by the valuation of all the investments held within it. Depending on the type of investments that you choose to hold within your SIPP, some of these may not return the amount you initially invested especially where their value can go down as well as up. This could impact the level of benefits you can take on your retirement.
You can also find useful and impartial information about pension options and retirement provisions on the Money Advice Service website, formerly the UK Consumer Financial Education Body (CFEB).