SIPP Pension Advice

SIPP Pensions have gained immensely in popularity over the past few years. In particular, an ever increasing level of interest has been in property investments, given the rise in property values, and the tax benefits that they offer.  Moreover, the introduction of ‘SIPP qualified’ overseas property investments has helped to provide investors and pension fund holders with increasing teir investment options.

To provide additional comfort to the investor, Self Invested Personal Pensions / SIPPs are regulated by the Financial Services Authority (FSA), which is increasingly important in today’s uncertain and volatile economic climate.

Most new property developments, both domestically and overseas, are SIPP recognised, and if you looking for an property investment for your SIPP pension, this can be a good investment choice. A reputable investment firm will be able to assist with any questions and guide in the right direction for further detailed information, and assist you in your investment decisions.

Pension Benefits of a SIPP Pension

The development of SIPP pensions have enabled integration and flexibility for savers to determine how their funds are invested, giving them much more control. Traditional pensions have often been limited in diversification, and the investment choices available.

SIPP pensions have enabled the pension holder to remove under-performing investments from their portfolio, thus maximising the return potential. The flexibility of a SIPP offers a lot of unique investment advantages, avoiding the problems associated with traditional pensions that may have heavy losses during periods of economic downturn.

Property Management Advantages of a SIPP Pension

One thing to note is that property investments through SIPPs can be accessed through real estate investment funds, where a wide selection of properties are selected and managed by experts. This option allows for diversification, and a decent return potential, and also lowers the risk factors involved.

Whilst it of course possible for an investor, in a SIPP Pension or traditional pension plan to invest in a property fund, acting as an individual investor will enable the SIPP investor to benefit from personal control over his or her pension fund. Owning investment properties through a SIPP fund avoids complicated legal issues, high capital outlay and overall property management issues, and at the end of the day, can produce better investment returns.

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Self Invested Pensions are becoming increasingly popular. To start up a SIPP an individual or their employer needs to approach an approved provider. These are normally insurance companies or fund managers but a comprehensive list is publicly available. You must use one of these providers to take full advantage of the tax benefits. Once a provider has been chosen, the plan holder can then manage the portfolio themselves, or they can appoint a manager to act on their behalf.

One of the key benefits of a Self-Invested Personal Pension is the tax advantages. Like all other personal pension plans, contributions to SIPPs are automatically exempt from basic rate tax. If you are a higher rate payer, you can claim additional relief in your tax returns. Similarly, if you have used your SIPP to invest in assets such as property, the income you receive is tax-free and is not subject to capital gains tax.

As with all pension plans, after retirement, the income that you draw-down will be subject to the usual income tax rates. The money you earn from your investments is also allowed to be reinvested tax-free, up to a threshold £235,000. Reinvesting your income is a great way of growing your pension pot without any upfront costs.

Another key advantage of a SIPP is its flexibility. Unlike other tax-efficient saving schemes, a SIPP gives you the ability to invest in a wide variety of stock market properties so you can potentially access higher rates of return even if rates are low. This will not be perfect for everyone, as SIPPs can be exposed to more risk, but for those who are not attracted to the rates offered by savings accounts and ISAs, SIPPs are a great alternative.

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