Think Pension, Think Longhurst, Part 2

Longhurst Limited

2nd November 2018

Think Pension – Think Longhurst

 

This article forms a five-part series where I explore the world of pensions.

Yes you read that correctly; head-line grabbing, tax efficient, adventure initiating, and dare I say, very exciting PENSIONS.

 

PART TWO – SELF INVESTED PERSONAL PENSIONS (SIPPS)

 

What is a SIPP?

 

A SIPP (Self Invested Personal Pension) is the chosen pension taxation wrapper for business owners and those savers who want access to a much wider choice of investment fund.

We offer a specialist SIPP advisory service to individuals and business owners who are looking to benefit from the additional advantages available through this taxation wrapper.

Traditional personal pensions will typically limit your investment choice to a more traditional pool of pension funds, however a SIPP will typically let you invest in a wider range of investments, such as commercial property and more esoteric investments.

A SIPP can also borrow money from lenders to purchase particular assets such as commercial property, or to otherwise benefit the SIPP. The maximum the SIPP can borrow is 50% of the net fund value of all assets at the date of the borrowing.

 

SIPP Investment Options

All FCA regulated advice provided will include risk warnings and due diligence on all investments under consideration, which can include the following:

  • Stocks and shares from the UK and overseas markets as well as unlisted shares (although you’ll pay stamp duty on these purchases along with your SIPP provider’s own dealing charges);
  • Collective investments such as OEICs, unit and investment trusts;
  • UK government bonds, treasury bills and depositary receipts;
  • Commercial property such as offices or retail units. If you’re a business owner, you can even use your SIPP to buy your work premises with the rent going directly back into your pension. SIPPs can also be used to raise a mortgage to part-fund the purchase of a property, the rental income from which is then used to service the mortgage and any other property costs;
  • Real estate investment trusts (REITs) listed on any stock exchange;
  • Exchange-traded funds (ETFs) listed on any HMRC recognised stock exchange;
  • Commodities that are traded on any HMRC recognised stock exchange;
  • Structured products;
  • Other collective investment schemes and derivatives listed on any stock exchange including fixed-interest securities and loan notes;
  • Unregulated collective investment schemes;
  • Bank deposit accounts;
  • Certain National Savings & Investments products; and
  • Cash.

Residential property is not a permitted investment in a SIPP (except in very limited circumstances described in the HMRC Pension Tax Manual, section PTM125200).

Not all SIPPS allow investment in the full range of allowable investments so choice may also be dependent on a particular SIPP provider.

 

Next steps

If this article raises spikes an interest, or raises a question, please let me know.

All discussions are confidential and initially held at my expense. 

 

Part three of this series focuses on Personal Pension Plans (Defined Contribution/Money Purchase).

Think Pension, Think Longhurst.

 

 

Chris Broome FPFS is owner and Chartered Financial Planner at Longhurst. Longhurst are an STC member firm of lifestyle financial planners and independent financial advisers based on Silverstone Park. Chris is a Pension Transfer Specialist and holds advanced qualifications in this area of advice.

We’re also the folks behind the Inside Silverstone business podcast, so get in touch if you’d like to appear on the show!

 

Contact:

W: www.longhurst.co.uk

E: chris@longhurst.co.uk

T: 01604 210636

M: 07793 841654

 

 

 

A pension is a long term investment, the fund value may fluctuate and can go down. Your eventual income may depend upon the size of the fund at retirement, future interest rates and tax legislation. 

Information is based on current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from taxation, are subject to change.

The value of your investment can go down as well as up, and you can get back less than you originally invested.

By transferring your occupational pension scheme benefits into a personal arrangement, you may be giving up rights to guaranteed benefits, known levels of pension income and increases that will be applied in the future.

Join the cluster today!

Enjoy all the benefits being a member brings and register your interest here.

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