In recent years the pensions industry has become more advanced in terms of the flexibility of investments available and the structure of the actual pension arrangements.
It is an area of constant change and you should consult us regularly to make preparations for a secure and enjoyable retirement.
Self Invested Personal Pensions (SIPPs)
A Self Invested Personal Pension (SIPP) is a tax-efficient wrapper within which a wide range of investments can be held. A new SIPP must appoint a scheme administrator, usually the recognised product provider. SIPPs have the same tax benefits and regulations as conventional personal pension plans but you and / or your advisers have control over the investment choice – each SIPP is unique to the individual. Otherwise, it operates in the same way as a conventional personal pension in respect of contributions and eligibility, for Her Majesty’s Revenue & Customs (HMRC) purposes.
The complex nature of a SIPP means that it is not suitable for all investors. Often, the benefits of ‘self investment’ are only advantageous to people with very large funds and / or investors with some level of sophistication when it comes to investment decisions. Often, there are additional charges for arranging and dealing within a SIPP and these charges would erode smaller funds quickly.
The benefits of using a SIPP include being able to invest in:
We will be able to provide more details and make a recommendation based on your own circumstances.
‘A’ Day (the Appointed day) arrived on 6th April 2006 and brought with it sweeping and radical changes in relation to pension legislation.
This has created a single universal regime that replaced the previous eight tax regimes and the changes affect all savers in occupational and personal pension schemes, employers and financial advisers.
Pension simplification introduced two new controls, the pension Lifetime Allowance (LA) and pension Annual Allowance (AA).
From April 2006, there is now just one set of tax rules for all types of pension, with an individual LA of £1million (2017/2018) and an individual AA of £40,000 (2017/2018). Most individuals are able to fund up to these limits with the possibility to also carrying forward unused AA from the previous 3 years.
High earners with income in excess of £110,000 p.a. may have a reduced annual allowance of £10,000 under the tapered annual allowance rules. Individuals who have already flexibly accessed part of a pension scheme will only have an AA of £4,000.
Exceeding either the LA or the AA will simply trigger a tax charge.
Other changes included:
In addition another raft of changes introduced in April 2016 also gives individuals further and greater flexibility to access their pension savings from age 55.
The changes also include:
Pensions are a long term investment. You may get back less than you put in. Pensions can be and are subject to tax and regulatory change therefore the tax treatment of pension benefits can and may change in the future.