SIPP

FACTS ABOUT PENSIONS – THE SECRET DOUBLY WHAMMY !


 

Most of us have pensions that we have no influence or control over and we leave them alone, because, quite frankly, it is the easiest thing to do. Any perceived benefit from a pension seems to be too far away to worry about for now.


 

Unfortunately, economic conditions are having a devastating effect on pensions that are primarily equities based and you need to address this sooner rather than later:




 

Most pensions are invested in long term Equities by Fund Managers and the FTSE is at the same level today as it was in 1997 – FIFTEEN YEARS AGO. The result of this is that pension pots remain static or fall, whilst the pension itself still incurs annual charges and fees, despite remaining (at best) static.


 

Having paid in to a pretty static pension pot during your working life, it then comes time to buy the Annuity! To compound the effects of a static pension fund, Annuities have dropped by as much as 60% over the last 20 years and a £100,000 pot will purchase barely £6,000 per annum today. That same £100,000 would have purchased £14,000 in 1991. (source Aegon)




 

There is an alternative and that alternative is a SIPP - Self Invested Personal Pension.


 

THREE MYTHS AND A FACT ABOUT SIPPS (Self Invested Personal Pensions)

  1. They are only for higher rate taxpayers – FALSE. Any UK taxpayer can open a SIPP.

  2. Only risky investments can go into SIPPS – FALSE. Any investment class can be placed in a SIPP.

  3. Final salary schemes should not be transferred to a SIPP – FALSE. There are valid circumstances when this may be a good option. In particular, if early retirement is being considered or the scheme is now closed for new applicants. A pension specialist will give you the best advice.

    SIPPS are hands on – TRUE. A SIPP is a self-invested personal pension and this means that YOU control your own investments - NOT a faceless fund manager.


 

WHY YOU SHOULD OPEN A SIPP TODAY:


 

1) CONTROL – YOU decide where YOUR money is invested


2) CONSOLIDATION – Transfer all of your preserved pensions into one place:

  • Former employers' frozen pensions

  • Private pensions

  • New arrangements

  • Old SERPS * NOTE – Do yourself a favour and call the SERPS HOTLINE at the Department for Work & Pensions on 08459 150150, quoting your name, DOB and NI number. It only costs you a phone call to double check. Most people have forgotten, or are unaware that they did actually contract out!


3) DIVERSIFICATION – Invest in the type of asset class that YOU want to invest in, not what someone decides on your behalf. In other words, every asset class that your existing pension arrangement uses, can be utilized. Plus, you have the option to diversify with such classes as: Commercial property, gold, alternative investments, Bonds, Unit Trusts, land and much more.


4) FLEXIBILITY – Up to 25% cash draw down is available from 55 years and there is NO OBLIGATION for an annuity to be purchased on retirement, you can choose alternatives.


 

It is NEVER too late to start your Pension planning

The Self Invested Personal Pension gives every UK taxpayer the ability to take control of their future pension and to allow them to decide what, where and how their investments are made. You do not have to pay fees for poor performance and feel helpless.

Even if you have no other Pension funds to transfer into a SIPP or you simply don't want to - you can start with new money and HMRC will give you a helping hand.

Place £10,000 into your own SIPP and it will be immediately topped up by another £2,000 (20%) by HMRC. If you are a higher rate tax payer, you can claim a further 20% via your next self assessment. Remember, that SIPP investments, like all pensions investments, grow tax free.

You can invest ALL of this money into asset classes that YOU choose. With the help of a qualified pension specialist, you can diversify your investments, so that you are not universally exposed to Equities.


 


 

We are NOT licensed Financial Advisors and cannot therefore give "advice", but with the benefit of experience, we are able to point you in the direction of reputable information sources.