SIPP
SIPP
SIPP
Self Invested Personal Pensions were introduced in 1989 to give those planning for retirement greater control over where their pension fund is invested. A SIPP offers the widest range of pension investments including Cash, Equities (both UK and foreign), Gilts, Unit Trusts, OEICS, Hedge Funds, Investment Trusts, Real Estate Investment Trusts, Commercial Property and Land, Traded Endowment Plans and Traded Options.
A SIPP is used in preference to a Personal Pension when a plan holder wishes to purchase commercial property within their pension investment. This option is particularly useful for owners of small businesses who can buy premises using their pension funds. There are attractive tax advantages in using the pension fund to buy commercial property - any rental income is received tax-free by the fund and when the property is sold there is no capital gains tax liability. Initially, SIPPs were regarded as an elite product but they are now used by many people with fairly modest contributions who wish to have greater control over their pension fund strategy.
In October 2008 the rules changed to allow a SIPP to hold protected rights funds (contributions from national insurance rebates) which further increased the appeal of SIPP as a pension product. It is important to understand that, whilst a SIPP can offer greater flexibility in terms of the investment holdings, they are governed by the same taxation rules as Personal Pension Plans