Self Invested Personal Pensions, often abbreviated to SIPPs are a variety of personal pension that provide pension holders with a much larger level of freedom than other pensions. SIPPs provide investors the ability to pick and choose what they invest their pension contributions in or if they feel that they are not adequately knowledgable enough to make that kind of investment decision, they can arrange for a specialist wealth manager to make those decisions for them. They need to appoint a trustee who will monitor the performance of the Self Invested Personal Pension scheme.
A SIPP can accommodate a large variety of investments, including shares, bonds, cash, property, hedge funds and private equity. You are likely to pay for the wider level of choice with more expensive charges. The charges come in two types, a set up fee and an yearly administration fee. A low cost SIPP, with a smaller range of options, such as just shares, funds and cash, may not charge a set up fee and only a small, yearly fee.
In addition to the annual charge, there will be transaction charges on items such as share dealing and switching investments around. Under the rules which came into effect in April 2006, investors have much more freedom to invest money in a SIPP. They can make contributions up to 100 per cent of their earnings, with full tax relief on the total, subject to a maximum earnings limit of 245,000 in 2009/10. More can be invested but without tax relief. This replaces the less generous and more complicated earnings related allowances that used to be available.
Contributions can be made by the self employed, employers and employees. Employees in a company pension scheme who earned more than 30,000 could not also contribute to a Self Invested Personal Pension previously, but regulations allow them to do so now, provided that they do not exceed the limit of 100% of their earnings, up to the maximum mentioned in the previous paragraph.
Investors are free to bring together several different pensions under the one SIPP by transferring a series of separate plans into a Self Invested Personal Pension. Before doing this it is sensible to check whether any valuable benefits would be lost in the transfer of an existing pension and the cost of the transfer should also be taken into account. Some providers make no charge - others do.
If you think that you would benefit from a Self Invested Personal Pension, ask the advice of an independent financial adviser or your wealth management specialist. Apart from being well versed in the workings of a SIPP they will also have access to the full range of schemes that the market has to offer and be able to help you choose which product is best for your individual circumstances.
A SIPP can accommodate a large variety of investments, including shares, bonds, cash, property, hedge funds and private equity. You are likely to pay for the wider level of choice with more expensive charges. The charges come in two types, a set up fee and an yearly administration fee. A low cost SIPP, with a smaller range of options, such as just shares, funds and cash, may not charge a set up fee and only a small, yearly fee.
In addition to the annual charge, there will be transaction charges on items such as share dealing and switching investments around. Under the rules which came into effect in April 2006, investors have much more freedom to invest money in a SIPP. They can make contributions up to 100 per cent of their earnings, with full tax relief on the total, subject to a maximum earnings limit of 245,000 in 2009/10. More can be invested but without tax relief. This replaces the less generous and more complicated earnings related allowances that used to be available.
Contributions can be made by the self employed, employers and employees. Employees in a company pension scheme who earned more than 30,000 could not also contribute to a Self Invested Personal Pension previously, but regulations allow them to do so now, provided that they do not exceed the limit of 100% of their earnings, up to the maximum mentioned in the previous paragraph.
Investors are free to bring together several different pensions under the one SIPP by transferring a series of separate plans into a Self Invested Personal Pension. Before doing this it is sensible to check whether any valuable benefits would be lost in the transfer of an existing pension and the cost of the transfer should also be taken into account. Some providers make no charge - others do.
If you think that you would benefit from a Self Invested Personal Pension, ask the advice of an independent financial adviser or your wealth management specialist. Apart from being well versed in the workings of a SIPP they will also have access to the full range of schemes that the market has to offer and be able to help you choose which product is best for your individual circumstances.
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Unknown - Friday, November 23, 2012
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