SIPPS

SIPPS are a vast improvement on the flexibility in the UK pensions industry. For those living outside of the UK it is worth comparing SIPPS to QROPS. Even if you already have your pension funds in a SIPP, it can deliver benefits to transfer these to a QROPS.

  1. What is a SIPP?

    A SIPP is a Self Invested Personal Pension Plan (SIPP). Put simply, a SIPP is an upmarket version of the standard personal pension plan, which has a number of major advantages, which include: Tax efficiency, Investment flexibility & Estate Planning.

  2. Who Can Take Out a SIPP?

    To take out a SIPP you must be under the age of 75 and a resident in the UK, or a Crown servant or the spouse or civil partner of a Crown servant.

  3. What’s the Minimum Value for a SIPP?

    Each SIPP provider varies, but the minimum value is normally about £50 000, or you need to be able to contribute around £5000 per annum.

  4. What Investments Can a SIPP Hold?

    HMRC no longer provides a definitive list of what a SIPP may or may not invest in. However a SIPP does have some flexibility as to the assets it can hold.

  5. Can I Invest in Property via a SIPP?

    A main attraction of a SIPP is that they can be used to develop and invest in commercial property. This can include shops, industrial units or offices.

  6. I have some existing assets which I would like to include in a SIPP, can I do this?

    Yes, you either consolidate your existing pension into a SIPP or you can also transfer in existing assets ‘In Specie’, without having to sell and repurchase them.

  7. When Can I Take Benefits?

    Benefits can be taken from 55 (or earlier if retirement is due to ill health), regardless of whether you have commenced retirement. (If before 6 April 2010 benefits can be taken from age 50)

  8. How Can I take the Benefits?

    You will not be able to draw out the entire fund value to cash upon retirement. However, after age 55 (or 50 if before April 2010) benefits can be taken as follows:

    • 25% tax free lump sum
      The lower of:
      • SIPP fund value
      • Unused ‘Lifetime Allowance’
    • The rest can be drawn as an income.
  9. What Happens If I Die?

    The benefits that you can get upon your death depends on a few factors, but generally as with all UK pensions, when you die, you lose a portion of the funds to tax or the pension providers.

  10. Would a SIPP or QROPS be Better for me? 

    A SIPP is only available to UK residents or Crown servants, while if you are living outside the UK, or are planning on leaving the UK in the next 12 months, then a QROPS would probably be more suitable.

    It is good to note that the benefits of a correctly setup QROPS are generally far greater than a SIPP, and should be your preference. Thus, if you have an existing UK pension and qualify for a QROPS it something that you should definitely consider as it will make a substantial impact on your future lifestyle in retirement.