Just Do It: SIPP’s
Article 2 – March 2010
Elaine Porter
Elaine Porter has over 10 years experience in financial services, having started her career in the offshore investment market to most recently being a successful Financial Advisor with one of the ‘big 5’. Elaine’s specialist areas of expertise are protection and pension planning. To contact Elaine email elaine.porter@justdoproperty.com Resources |
Self Invested Personal Pensions
Following on from my article in January I have since been asked some questions on SIPPs and so decided to dedicate this article to a question and answers session
1) What are the differences between a personal pension and a self invested personal pension
Both a Personal Pension and A Self Invested Personal Pension allow the investor the advantage of contributing to a retirement plan with tax relief on contributions at the highest levels (i.e. a higher rate tax payer gets 40% relief).
The benefits for both are not available until retirement which can be from age 55-75 and then you can only access 25% as a tax free lump sum and the remainder to be taken as drawdown, left until age 75 or can be used to purchase an annuity.
The main difference on a Self Invested Pension is the ability to hold a wide range of invested assets under one umbrella. These include Individual listed shares and as highlighted last month commercial property.
However, as SIPPs can be a more costly contract many providers allow you the option of transferring from a Personal Pension into a SIPP at a later stage and taking advantage of the lower charging structure on a personal pension now with an option at a later date to transfer to the SIPP facility.
2) What are the advantages of investing in commercial property through a Self Invested Personal Pension.
With the current economic climate a lot of companies are either struggling to get the finance to purchase their commercial properties or want to release capital from the business in purchasing the property owned.
With funds available in a SIPP you can borrow 50% of the net value of these funds. (e.g. a £50,0000 available in a SIPP can part fund commercial property worth £750,000)
You can lease back the property to the business and income is paid directly to the SIPP thus increasing the future pension value.
Contributions to the SIPP (like any pension) attract tax relief at the highest level.
Your pension may benefit over time from an increase in Property Valuation.
3) What is the maximum contribution I can make into a SIPP?
The maximum SIPP contribution is either £3,600 or 100% of an individual’s income, up to a maximum of £245,000 per annum (for 2009/10 tax year and £255,000 for 2010/11). It is possible to contribute more than the annual allowance in certain circumstances such as in the year of retirement or by changing input periods. We would strongly recommend that advice is sought.
For Independent Financial Advice please contact me on elaine.porter@justdoproperty.com
If you would like to ask Elaine a question click here
Following on from my article in January I have since been asked some questions on SIPPs and so decided to dedicate this article to a question and answers session
1) What are the differences between a personal pension and a self invested personal pension
Both a Personal Pension and A Self Invested Personal Pension allow the investor the advantage of contributing to a retirement plan with tax relief on contributions at the highest levels (i.e. a higher rate tax payer gets 40% relief).
The benefits for both are not available until retirement which can be from age 55-75 and then you can only access 25% as a tax free lump sum and the remainder to be taken as drawdown, left until age 75 or can be used to purchase an annuity.
The main difference on a Self Invested Pension is the ability to hold a wide range of invested assets under one umbrella. These include Individual listed shares and as highlighted last month commercial property.
However, as SIPPs can be a more costly contract many providers allow you the option of transferring from a Personal Pension into a SIPP at a later stage and taking advantage of the lower charging structure on a personal pension now with an option at a later date to transfer to the SIPP facility.
2) What are the advantages of investing in commercial property through a Self Invested Personal Pension.
With the current economic climate a lot of companies are either struggling to get the finance to purchase their commercial properties or want to release capital from the business in purchasing the property owned.
With funds available in a SIPP you can borrow 50% of the net value of these funds. (e.g. a £50,0000 available in a SIPP can part fund commercial property worth £750,000)
You can lease back the property to the business and income is paid directly to the SIPP thus increasing the future pension value.
Contributions to the SIPP (like any pension) attract tax relief at the highest level.
Your pension may benefit over time from an increase in Property Valuation.
3) What is the maximum contribution I can make into a SIPP?
The maximum SIPP contribution is either £3,600 or 100% of an individual’s income, up to a maximum of £245,000 per annum (for 2009/10 tax year and £255,000 for 2010/11). It is possible to contribute more than the annual allowance in certain circumstances such as in the year of retirement or by changing input periods. We would strongly recommend that advice is sought.
