There are some restrictions designed solely to prevent abuse of the Self-Invested Personal Pension (SIPP). Any SIPP holding prohibited assets directly or indirectly will have all tax advantages removed, which will broadly mean that it is at least no more advantageous to hold such assets in a pension scheme than it is to hold them personally.
Self-Invested Personal Pensions (SIPP’s) offer many investment advantages over traditional pensions, such as flexibility, diversification potential and sheer investment choice. They are not restricted to the limited fund range offered within an ordinary personal pension or stakeholder pension. A SIPP investor can choose from, and switch between, a vast choice of unit trusts, investment trusts and Open Ended investment Companies (OEICs), from across the market. You can therefore create a rich and diverse investment portfolio with these possibilities.
â??Pensionâ?? is a word that everyone will hear throughout their career, and something that people will have at least some knowledge about, but the term annuity may be a bit of a puzzle. In its simplest form an annuity is the most common method of changing your pension contract into an income for retirement. You basically pass funds from your pension over to an insurance company who then provide you with an income for the rest of your life on a specified basis. It's a very simple product and the basics are easy to understand.
The Basic State Pension is the one we're all probably most familiar with, and the one which most people in the UK are eligible for. You qualify for it through the payment of National Insurance Contributions you've made throughout your working life.
A big issue when it comes to pension schemes surrounds the implications that divorce will have. As your pension can actually be one of the largest assets you have - it could be worth even more than your home - then it will become a major consideration in your divorce settlement.
Pensions allow you to build up a lump sum, in a predominantly tax free fund, that give you an income and possibly a tax free lump sum when you retire. Most pension schemes tend to work the same way. While you are working, you pay an amount from your wages into your pension fund. In the case of the Basic State Pension, you pay National Insurance contributions to the government directly from your salary.
It is possible to use your Self-Invested Pension Plan (SIPP) to purchase a property. However you must bear in mind that there are costs involved in buying property using your SIPP, all of which have to be paid by the SIPP itself.
Here's how you can cash-in one of the longest standing advantages of having a SIPP - buying commercial property. There are just a few things you'll need to know first. First...
Pension consolidation is an option when a person has more than one pension scheme, even if the other schemes are â??dormantâ??. Having more than one pension scheme is not uncommon, and many people take the option to consolidate them. There are clear advantages of doing this in some cases, but it needs to be known that these are wholly dependent on your personal plans, so speaking to a financial adviser is recommended.
Many people ask themselves the question of, “in which can I invest my Protected Rights?” Well, there are now thousands of funds, as well as commercial property, for example, amongst other investments that protected rights funds can now be invested in. You can now combine Protected Rights with your other pension funds and invest them as one fund, too.
