SIPPs (Self Invested Personal Pensions) have been making rather frequent appearances in newspapers and magazines over the last year. With Hoodless Brennan’s launch of its own SIPP dealing account, Mark Rayden, Technology Services & Product Manager gives a brief overview of SIPPs and the current debate.
If you have read any newspapers recently you will not have missed the fact that pension saving is in the spotlight. Why is this?
SIPP - Not new but certainly the fashion
SIPPs were previously in the news because of proposals to allow residential property to be added to the investment choice of a SIPP under the “A-Day” changes. These came into force on 6 April 2006 and changed all the pension regulations to one set of rules, namely:
Contributions to a pension are now subject to a maximum annual limit of 100% of your earnings which for 2006-2007, starts at £215,000 or £3,600 if you have not earned anything.
- Simpler and more flexible rules on what you can do when you actually retire – you are no longer being forced to buy an annuity at 75 years old which was a problem if annuity rates were low when you reached 75.
Also if you are a mum or carer at home and not earning, you can now use any pension to save £3,600 a year.
However, in a surprising U-turn, the Government decided against the residential property element three months before “A-Day” and annoyed a whole raft of the pensions industry and people who opened a SIPP to place a buy-to-let investment into a pension. But does this mean SIPPs have lost their appeal?
SIPP - Investment choice and investment you control
Unlike a managed pension where you choose a fund for your pension money to be managed by someone for you, SIPPs offer you the opportunity to be your own individual fund manager. We believe that with the launch of our own SIPP, we are again leading the way in giving UK investors the control and freedom to manage their own pension investment with our clear and simple to understand charging motto.
You are also able to invest in a wide range of investments with the Hoodless Brennan SIPP, details of which are available here.
Tax, tax and more tax – strike back and get some returned!*
The Government may be encroaching by stealth ever deeper into our wallets, but a SIPP currently offers some great tax advantages to help you save for retirement. Whilst these tax benefits could change in the future, and will differ in value for each investor, these tax breaks can be summarised as follows:
Contributions receive 22% tax rebated from the government.
- Higher rate taxpayers can also reclaim an additional 18% rebate through their tax return, making a 40% return on every £1 invested.
Gains within a pension are free of Capital Gains Tax.
When you retire you could potentially take 25% of the pension as tax free cash.**
** If retiring before 75, please consult an IFA for further details as there are some restrictions and options that could potentially affect this figure.
But aren’t SIPPs expensive to run?
Until recently, SIPPs were the preserve of experienced investors and with charges based on a percentage of your investment, could certainly be expensive. Our SIPPs, however, offer fl at rate charges and our usual low dealing costs and are tailored to offer the services you need, at low cost.
Hoodless Brennan Easy Builder and Comprehensive SIPPs
We are launching two types of SIPP: an Easy Builder SIPP and a Comprehensive SIPP, both of which are available as an online account or as a telephone dealing account. The choice and flexibility are yours: you pay for the services you need, not those you don’t.
Easy Builder SIPP – it does what it says on the tin – a simple, low cost pension with an annual charge of just £275, which lets you invest in equity products, and has our usual low dealing commissions from just £7 per deal.***
Comprehensive SIPP – again it does what it says on the tin – this SIPP has a wide investment range including commercial property but still has a low annual charge of just £375 and our usual low dealing commissions from just £7 per deal.***
*** Online Dealing Charges. Full details of our commission charges for telephone dealing accounts and the additional charges that apply in respect of commercial property are set out in our commission schedule.
*There is no guarantee that the tax advantages promoted as part of any investment will remain in existence. Additionally, the levels and bases of taxation may change. HB is not responsible for assessing personal tax implications of investing in these companies or any recommendations that we may make, and investors should always take independent professional tax advice.
For more information on our SIPPs products click here.
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