Self Invested Personal Pensions, often called SIPPs are a type of personal pension that provide pension holders with a greater level of freedom than other traditional pensions. SIPPs provide investors the opportunity to determine what they invest their pension in or if they feel that they are not sufficiently knowledgable enough to make that kind of decision, they can arrange for a specialist investment manager to make the decisions for them. They are required to appoint a trustee who will monitor the performance of the Self Invested Personal Pension.
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.
As well as the annual charge, there will be transaction charges on other items such as share dealing and moving investments around. Under the regulations that came into force in April 2006, investors have much more freedom to invest money in a SIPP. They can make contributions of up to 100 per cent of their earnings, with full tax relief on the total, subject to a maximum limit of 245,000 per annum in 2009/10. More can be invested in to the pension but without tax relief. This is instead of the less generous and more complicated earnings related limits that used to be available.
Contributions can be made by the self employed, employers and employees. Previously employees in a company pension scheme who earned more than 30,000 could not also contribute to a Self Invested Personal Pension, but they are free to do so now, provided that they do not exceed the limit of 100 per cent of their earnings, up to the previously mentioned maximum.
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.
As well as the annual charge, there will be transaction charges on other items such as share dealing and moving investments around. Under the regulations that came into force in April 2006, investors have much more freedom to invest money in a SIPP. They can make contributions of up to 100 per cent of their earnings, with full tax relief on the total, subject to a maximum limit of 245,000 per annum in 2009/10. More can be invested in to the pension but without tax relief. This is instead of the less generous and more complicated earnings related limits that used to be available.
Contributions can be made by the self employed, employers and employees. Previously employees in a company pension scheme who earned more than 30,000 could not also contribute to a Self Invested Personal Pension, but they are free to do so now, provided that they do not exceed the limit of 100 per cent of their earnings, up to the previously mentioned maximum.
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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