A Trustee Investment Plan (TIP) enables trustees of occupational pension schemes, self-invested personal pensions (SIPPs) and small self administered schemes (SSAS) to diversify their range of investments. Through a TIP – and although they hold their main pension with another provider – trustees can make single premium investments in the funds of other insurance companies but without needing to change the company that administers their pension.
Are you familiar with the type of personal pension scheme that allows individual to own investments that are permitted by the HMRC (HM Revenue and Customs)? If not, then you should know that it is known as the SIPP pension.
Under this scheme provided that the scheme administrator is a co-trustee to implement control, you as a member may own assets (thru individual trust). This feature is different with usual types of personal pension, where your provider as trustee will control and own the assets.
Here are three general types of SIPP, wherein the pension industry named them towards industry terms which best describe them:
- Hybrid. In this, only part of the assets is to be self-invested, for some must be at all times in custody of usual insured funds. Requiring insured funds are common from typical providers in order to get their product charges.
- Deferred. Under this, although some providers offer direct access to mutual funds, most assets are held in insured funds. Until an indefinite date, self-investment is ‘deferred’ in this. Luckily, some newly available types of this provide 1,000 plus fund options to allow less restriction.
- Full. With this, there are no restrictions in access to many allowed classes of investment assets.
Do you know that SIPP pension is a personal pension scheme that is approved by the government of United Kingdom? And do you know that under this personal pension, you are allowed to choose investments of your choice from the collection of accepted investments by the HMRC (HM Revenue and Customs)?
With SIPPs, like stakeholder pension another type of personal pension, tax rebates are also allowed on your contributions. But these are in exchange for limits on accessibility. And also under this scheme benefit withdrawal, rules for contributions and others are the same with other types of personal pension.
Although under SIPPs having any investments that are HMRC-accepted is alright, there are still some that are not allowed by most providers. Not allowed by most, for some of these are subjected to weighty tax penalties. That’s why there are allowed by primary legislation but will eventually be banned by providers due to their high tax penalties. And these weightily taxed investments are the following:
- Residential properties
- Assets which are somewhat unusual, but highly collected, like art, stamps, classic cars, etc.
- Concrete and movable properties, less than £6,000, are subjected to additional conditions with regard to how they are used.
What is SIPP pension? Well, with it you are able to arrange investments that are either already your own or not into your personal pension pot. SIPP, by the way stands for self invested personal pension.
Under this kind of scheme you could have more kinds of investments, like commercial properties and shares, which are of course a lot when compared to the things offered by a normal personal pension.
You could also have day to day control on your investment, which you could change from cash to shares, and shares to cash.
And even having unsecured pension is also possible with this one. Also known as income drawdown and income withdrawal, it allows you to have lump sum free from tax charge from your fund while it is stayed invested even after retirement.
SIPPs allow you to put into your pension things like:
- Deposit accounts with financial organizations like building societies and banks
- Direct property investment
- Government securities, known as gilts
- Insurance company funds
- Investment trusts
- National savings products
- Particular stocks and shares, which are quoted on a recognized UK and/or overseas stock
- Traded endowment policies
- Unit trusts.
SIPP Pensions are very flexible pension schemes
SIPP pension has both irresistible advantages and of course undeniable disadvantages, like any other scheme there is. And so, here are some helpful tips you could follow when dealing with SIPPs:
First it can be opened for as low as £5,000, but it’s not advisable for little sums. So it is not a good idea for those who are mid way their career. Instead it is advisable if you are still young and just at the start of your own career, for along the way, large amounts may still be put in.
Next is that it’s a personal pension that you should administer on your own. So when dealing with investment strategy, it should all be your duty. Don’t have someone deal with it for you, that’ll just cost you more.
Third you should know that it costs higher compared to stakeholder pension, and even more with money purchase company scheme.
Another is that you should be very careful with the investments you put into it. It is a long term investment, so be careful. Because if your not, you might eliminate your entire pension with one inappropriate investment.
Lastly, remember that you’re still deemed to have annuity when you reach 75.
Do you know what SIPP pension is? SIPP stands for Self Invested Personal Pension. It is a form of pension that will permit you to put together investments (either you already own or not) into your own personal pension pot. With it you can do things like:
- Have more kinds of investment, such as commercial property and shares, compared to what a normal personal pension offers
- Have unsecured pension, or income drawdown, which allows you to obtain tax-free lump sum from your fund while it stays invested
This type of scheme is available to both companies and individuals. For companies it is referred as Group SIPPs.
But be warned, not because it has advantages doesn’t mean it has no disadvantages. So here are two helpful tips on disadvantages:
- SIPPs are not a good idea for those with little sums. You can start for as low as £5,000 to open up SIPP. That’s good if your still young and just starting your own career, but not if your midway your career
- It is a personal pension that you should control by yourself, especially with regards to your investment strategies. Hiring someone to manage it will only cost you more.
In this day and age, different kinds of pension schemes are available. The three common type of scheme are the personal pension, company pension, and the new popular type which is the SIPP pension.
Personal pension is available to you even if you are employed, self-employed, or even an unemployed individual. It has a flexible kind of scheme known as the stakeholder pension.
Company pension is a scheme that is characterized into two types, which are money purchase and final salary (or ‘defined-benefit) scheme.
SIPP or also known as Self Invested Personal Pension is the type of scheme that allows you to a wider assortment of investment options. In this you are allowed to even invest into commercial properties and shares. This is available to both individual and companies. As for companies it is called as Group SIPPs.
And recently, some of the providers have commenced a new type of product. This product is known as the Family SIPP. This SIPP will allow individuals to form groups (it can be a group for family members, friends or business partners) and collect their pension arrangements into a single scheme. This SIPP Pension scheme will allow them more flexibility for planning their retirement.
Most people think that retirement is as easy as submitting your paperwork and waiting for their pension to arrive. Unfortunately, in a time of economic instability, relying on company pension may not be enough. Hence, it is important that you take steps in securing your future by getting pension advice.
If you are looking forward to an abundant lifestyle when you retire, then you have to start saving for a personal pension as soon as possible. This is especially important if you do not have access to a company pension and have no other means of saving for the future. Also, the SIPP Pension plan offers a tax efficient way of investing. An SIPP pension allows you to invest in a range of funds and it allows you to stop, start or change your contributions anytime you want to.
In order to make personal pension plans to work for you, you have to maintain a sense of balance. If you are earning a small wage and is trying to scrape by, then don’t put in a huge slice of you income to your pension because this means you won’t have enough money to spend for your daily needs. But if you can afford to start saving, then you should especially since most companies allow contributions as low as £25 as well as allow you to take payment breaks without penalties.