Self Invested Personal Pension
A Self Invested Personal Pension (SIPP)
is a special kind of Personal
Pension Plan. This type of scheme is much more
flexible than a standard pension since it allows you
to invest in many more kinds of assets. Under most
pensions you must invest in the funds offered by the
company. Using a Self Invested Personal Pension you
can invest in any of the following:
- Individual company shares
- Commercial Property (please note that
residential property purchase is not permitted)
- Unit Trusts/OEICs
- Cash deposits
Other types of more specialist investments
are also permitted.
SIPPs are also popular becuase the assets
can be used to borrow against. Under the new rules,
up to 50% of the net scheme assets can be borrowed,
to be used to fund legitimate pension assets. Thus,
the scheme can borrow money in order to buy new assets
(such as a commercial property), but this must be for
the benefit of the scheme. In this scenario, the scheme
would therefore receive the rent payable on the property.
The main downside to SIPPs are that the
charges are invariably much higher than on a standard
pension plan. SIPPs are therefore usually only relevant
to those who want to take more control over their investment
decisions, and have larger funds (typically over £100,000).
Click
here to see a leaflet on why you should review your
pension plans.
If you are interested
in Self Invested Personal Pensions (SIPPs), please contact
us.
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For
United Kingdom residents over 18 only. © 2003 - 2008 Woodruff Financial
Planning.