Product Library: Group SIPPs

A SIPP or Self Invested Personal Pension allows the policyholder total control over the investments held within their SIPP. Essentially a very extensive Personal Pension, SIPPs have all the same tax advantages as a normal personal pension, but instead of a fund manager choosing what to invest in, you are in charge of your own pension investment. SIPPs provide exciting choices for those clients for whom they are suitable.

This means you have a very wide range of investment choices. You can choose from Unit Trusts and Open Ended Investment Companies, Corporate Bonds, Gilts, individual stocks and shares on UK or some foreign exchanges, as well as purchasing commercial property. But it need not be all higher risk, specialised investments, you can simply put the money in cash, if you so desire.

Increasingly employers are choosing to introduce Group Self Invested Personal Pensions or Groups SIPPs to extend this total choice to all or some of their employees. This level of individual control has traditionally but not always, come at a price. Typically large fees were charged but once paid all SIPP investment options were available. Increasingly now SIPPs have a lower starting charge which offers access to a small number of core funds (Similar to stakeholder or traditional personal pensions) but they also offer the facility for members to pay further charges to access the increased fund choice.

Like all other UK pensions, SIPPs are very tax efficient plans. The UK Government (HMRC) gives tax relief on contributions, effectively meaning they contribute to your pension whenever you do. For example if a basic rate tax payer contributes £80 into their pension, HMRC will add a further £20 making the total £100. It is even better for a higher rate tax payer who is able to reclaim their additional higher rate tax relief either directly or via their tax return. In the above example this equates to a refund of £20 effectively meaning it has only cost them £60 to contribute £100 into their pension. However, it should be noted that some of the smaller, more specialist SIPP providers are unable to provide this relief immediately, and they often reclaim it from HMRC which can take upto 6 weeks.

When you reach retirement age, at any stage between 50 and 75 (55 in 2010), you can then choose how to retire. You will be able to take up to 25% of the fund as Tax Free Cash, if you so choose. Once this decision has been taken, you have a variety of different retirement options, including phased retirement, income drawdown, or an annuity.

Almost anyone under the age of 75 and resident in the UK is eligible for a SIPP, and if you are resident in the UK, you will be eligible for tax relief.

To discuss if a Group SIPPs will be suitable for your company, or if you would like any further information, or have any questions, please use the 'contact us' feature, or call on 01727 734040.