Investments: SIPPs and SSASs

We are here to help you choose the right Investment opportunity when looking where to invest your money. If you are unsure about what you need we can help so you make an informed choice.

David Burnell Financial Services Ltd can help you with Investment advice. We are independent advisers offering high quality, independent financial advice.

Self Invested Pension Plans (SIPPs)

The Financial Act of 1989 first introduced Self Invested Pension Plans (SIPPs). SIPP’s are governed by the personal pension regime but they have access to a larger range of investment options than do insured plans. SIPP’s have the same tax benefits and regulations as conventional personal pension plans but you, the client, and your advisers have greater investment choice making the SIPP individual to you.

In essence, a SIPP is a HMRC approved “wrapper” that enables an individual to invest their contributions into many different types of investment and offers far greater control over the way funds are invested. SIPPs can also accept transfers in from other pension schemes.

SIPP Advantages

SIPP’s can offer you freedom and flexibility. They give you the freedom to choose where your funds are invested including the Pension Freedoms introduced in April 2015. They can also be very cost effective for individuals with large pension funds who wish to take a more active role in the way that their pension fund is invested.

People over the age of 55 who are about to draw their pension but do not want to lock themselves into an annuity, can use a SIPP or Income Drawdown contract to provide more flexibility in drawing income.

When you retire you can take a tax-free cash lump sum up front and then draw an income from your remaining fund directly rather than buying an annuity. You retain the right to purchase an annuity at any time.

SIPP Investors

SIPP’s are particularly helpful to those who wish to,

  • Invest significant single or regular contributions
  • Transfer funds from previous pension arrangements
  • Acquire business premises
  • Personally control the investment of their own funds
  • Find an alternative to the pension products generally on offer from the life assurance industry

SIPP Investments

  • Unit Trusts
  • Investment Trusts
  • OEIC’s – Open-ended Investment Companies
  • Company Managed and Unit-Linked Funds
  • Deposit Accounts
  • Individual Pension Accounts
  • Traded Endowment Policies
  • Equities and Investments quoted on the major Stockmarkets
  • Commercial Property

Capped Drawdown

If you are currently in capped drawdown you have the option to stay in capped drawdown or move to flexi-access drawdown.

Flexi-access Drawdown

This is perhaps the most radical aspect of the new income drawdown rules from 6th April 2015. Under flexi-access drawdown there is no limit on the amount of income that can be drawn each year - the individual can take their entire income drawdown fund out in one go if they really want to! However, there is a Money Purchase Annual Allowance (MPAA) of £10,000 which is triggered by taking income from your fund.

The usual tax free lump sum is allowed, but any other withdrawals taken by the individual will be taxed as income in the tax year they are paid. If an individual becomes non-UK resident whilst in flexible drawdown, any income drawn when non-resident will be subject to UK tax if they return to the UK within five tax years of taking it.

Under flexi-access drawdown:-

  • You still have an overall annual allowance of £40,000 but,
  • No more than £10,000 can be paid to money purchase schemes
  • You cannot carry forward any unused MPAA

There is nominimum income requirement (MIR) for flexi-access drawdown.
Whichever option is taken it is imperative to receive qualified advice before making your decision.

Small Self Administered Scheme (SSASs)

Following the advent of pension simplification in April 2006 all new pension schemes fall under the same rules. However, existing schemes such as the SSAS can benefit from the old or new rules dependant on which benefits the customer.
A Small Self Administered Scheme is a special type of pension scheme that is usually restricted to the share holding Directors of Limited Companies. One of the attractions of a SSAS is the ability of members to make their own investment decisions and can be a route to a huge tax saving.

SSAS Management

A SSAS is run by an individual or company with pensions experience appointed on accordance with the requirements relating to a SSAS, also known as the Pensioneer Trustee, together with members of the SSAS appointed by the company under certain rules and regulations. These members are principally responsible for taking the investment decisions and are also known as the Managing Trustee. This is all in accordance with legislation and the Trust Bond and Rules.

SASS Trustees are usually not only members of the SSAS but also Directors of the sponsoring company. SSAS enables company directors to provide for retirement in a highly tax and cost effective manner. It provides advantages for businesses in the form of flexible use of capital and reductions in taxation. Investments such as gilts, bank deposits, unit trusts and managed pension funds are generally acceptable.

SSAS Contributions

The member cannot move contributions that excees their salary or the annual allowance which ever is the lower. The company is permitted to contribute any amount not exceeding the annual allowance.

The tax treatment is dependent on  individual circumstances and may be subject to change in the future.

Contact us for Investment Advice or for more Information...

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