Talk to us: 01254 660 333

 

How do I create a SIPP?

For an application from please contact Tel. No. 01254 660333.

What are the minimum and maximum contributions for a SIPP?

Contributions can be paid into the scheme by the member (or another person on behalf of the member) or an employer. There is no limit on the amount of member contributions that may be paid into the SIPP but there is a limit on the amount of tax relief a member may receive on contributions paid by, or on behalf of the member.

Member contributions are restricted to the amount of the individual’s relevant UK earnings or £3,600.

There is no set limit on the amount of tax relief that an employer may receive in respect of its contributions into the SIPP but tax relief is not automatic. The maximum overall tax relievable contribution per member is £225,000 (2007/08)

Can existing pension arrangements be received by a SIPP?

A SIPP can receive transfers from most other pension arrangements that a member may hold, although we would recommend that financial advice be taken prior to any action.

Retirement

The flexibility upon retirement is a huge appeal of a SIPP product. Retirement can be deferred to age 75 years and the member can continue to work once in receipt of these benefits. Under the current rules a member can take their benefits from the age of 55 years (age 50 until 2010). A tax-free lump sum can be drawn from the fund upon retirement equal to 25% of the fund value.

The member has 3 choices on retirement:

  • The purchase of an Annuity.
  • Unsecured pension (or Alternative Secured Pension post age 75 years).
  • Phased Retirement.

Annuity The member buys a guaranteed income for life with a life office.

Unsecured Pension

The member takes his pension directly from the fund. It is calculated by using the annuity rate figures published by the government’s actuarial department. The member can choose to take the Inland Revenue maximums or any level of pension between nil and the maximum figure. Phased Retirement The fund is split into 1000 segments giving added flexibility on the timing and amount of income taken which can be in the form of a secured or unsecured pension.

Death Benefits

The fund can be paid to a nominated beneficiary on death and is usually free from inheritance tax (before age 75). In the event of death the fund is distributed either to provide a spouses/ dependents pension or as a lump sum payment.

What are Permissible Investments in a SIPP?

The Trustees are responsible for implementing an investment strategy although the assistance of a professional advisor is usually required. The majority of investments held within a SIPP are predominantly free from income, corporation and capital gains tax.

The following are permissible investments in a Guardian SIPP;

  • Cash Deposits.
  • Authorised Unit Trusts, OEICs & AIMs.
  • Trustee Investment Plans.
  • Stocks & Shares quoted on the Stock Exchange.
  • Gilts or other Loan Stocks.
  • Futures & Options.
  • Second Hand Endowment Policies.
  • Commercial Property & Land.
  • Borrowings.
  • Unquoted shares.

NB. The Guardian SIPP does not permit investment in residential property, however we have found the following exceptions to the residential rules (certain parameters apply, please call for more information);

  • Student Accommodation.
  • Hotels, B & B, Youth Hostel.
  • Hotel Room.
  • Disabled Residencies.
  • Nursing Homes.
  • Golf Courses.
  • Farms.
  • Development Land.
  • Shop with a flat can be worked (although flat cannot ultimately be owned by SIPP).

Commercial Property & Land included in a SIPP

One of the most popular features of a SIPP is the ability to purchase commercial property with the assistance of borrowings. The trustees can borrow an Inland Revenue maximum of up to 50% of the value of the SIPP fund.

The property can be purchased from either a connected party including themselves or from a completely independent third party. The SIPP can also purchase a property jointly with another individual or another entity. The property can be leased to the member’s own company (on commercial terms) or indeed a third party.

Other Considerations.

  • The SIPP can register for VAT.
  • More information on purchasing a property within the pension scheme please contact Lisa on Tel No. 01254 660333.
  • Certain information will be required to proceed with a property purchase. Call 01254 660333 to request a questionaire . 

Is any other self investment permissible?

Yes. The Trustees can invest in shares of the members own company, however, must acquire a valuation of the shares from the company accountant/auditor is required in the first instance to establish if it will work.

Summary

A SIPP is a flexible way to save for retirement. It enjoys the generous tax breaks of any other pension scheme but in additions allows the member to retain control of his investment strategy and offers the member a number of options on retirement in a most flexible manner.