Take control of your pension
The pension market is going through some interesting changes at this moment in time, after the introduction of the new pension simplification rules that took effect from the 6th April 2006. ( See pension simplification ) The government has also decided to change the charges on the stakeholder pensions product that was introduced with a 1% per annum maximum charge, to 1.5% from April 2005 for the first 10 years of the plan. So what is the future for the pensions market? A growing number of investors are abandoning traditional personal pensions |
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Self Invested Personal Pension
Since 6th April 2006 all pension plans will be under the one regime, one set of rules to apply to all pension plans. There are also a complete new set of investment rules that apply.
A SIPP will enable you to invest in a wide range of assets with complete investment flexibility. Below you will find a list of the permitted investments you can make since April 2006.
Investment Flexibility
You can invest your pension monies in the following :
- OEICs/Unit Trusts
- Bonds
- Bank Accounts
- Commerical Property
- Discretionary Investment Manager funds
- Individual shares via a stockbroker
- Traded Endowments
- Hedge Funds
- Fixed Interest Securities
- Warrants
- Investment Trusts
Many investors avoided SIPP's in the past because they were more expensive than Stakeholder or Personal Pension plans. However charges are now dropping, as competition in the marketplace mounts, and a number of providers launch low cost SIPPs.
The charging structure for each individuals SIPP will depend upon the investments that each person chooses to hold. For example if you were happy just to invest in Insurance company funds, or unit trusts, your charges would be considerable less than someone who holds commerical property, or individual shares within their SIPP.
SIPPs are still not right for everyone, those people with small pension funds will find the charges unviable, and will not need the extra flexibility and choice that the SIPP provides. It is therefore important that you speak to a Financial adviser to determine whether a SIPP is right for you.
Another key feature of a SIPP will be the ability to pass on pension fund monies held within the SIPP to your family if you die without buying an annuity. The rules regarding this are different depending on when you die, before age 75 and after age 75.
Post 6th April 2006 SIPPs will also allow families to set up their own "Family SIPP" so all members of the family can invest there monies together. The SIPP will also allow you to defer purchasing an annuity past age 75, and allow you to pass the proceeds to the other members of the SIPP. This will be called an Alternatively Secured Pension.
So as you can see there are many advantages to having a SIPP and you should be looking to review your current pension plan now.
If you would like to find out more about your options and what is right for your situation, we are more than happy to talk to you.
Complete the form on the next page if you would like us to contact you about your pension plans, and about the possiblity of setting up a SIPP.
