Self-Invested Personal Pension

The following is an extract from the Wikipedia entry Wikipedia – SIPPs. You may also follow this link for the Full License Terms .

A Self-Invested Personal Pension (SIPP) is the name given to the type of UK government approved personal pension scheme, which allows individuals to make their own investment decisions from the full range of HM Revenue & Customs (HMRC) approved investments.

SIPPs are a type of Personal Pension Plan. Another subset of this type of pension is the Stakeholder Pension Plan. SIPPs, in common with personal pension schemes, are tax “wrappers”, allowing tax rebates on contributions in exchange for limits on accessibility. The HMRC rules allow for a greater range of investments to be held than Personal Pension Plans, notably equities and property. Rules for contributions, benefit withdrawal etc. are the same as for other personal pension schemes.

Investors may make choices about what assets are bought, leased or sold, and decide when those assets are acquired or disposed of, subject to the agreement of the SIPP trustees (usually the SIPP provider).

All assets are permitted by HMRC, however some will be subject to tax charges. The assets not subject to a tax charge include:

• Stocks and shares listed on a recognised exchange
• Futures and options traded on recognised futures exchange
• Authorised UK unit trusts and OEICs and other UCITS funds
• Unauthorised unit trusts that do not invest in residential property
• Unlisted Shares
• Investment trusts subject to FSA regulation
• Unitised insurance funds from EU insurers and IPAs
• Deposits and deposit interests
• Commercial property (including hotel rooms)
• Ground rents (as long as they do not contain any element of residential property)
• Traded endowments policies
• Derivatives products such as a Contract for difference (CFD)
• Gold bullion, which is specifically allowed for in legislation

Investments currently permitted by primary legislation but subsequently made subject to heavy tax penalties (and therefore typically not allowed by SIPP providers) include :

• Any item of tangible moveable property (whose market value does not exceed £6,000) – subject to further conditions on use of property
• Other exotic assets like vintage cars, wine, stamps and art
• Residential property

I have special arrangements with the Premier Group and would be happy to talk to you about the suitability of a transfer of your UK Pension Plan to this SIPPs provider. Please contact me at any time without obligation.

Which Jurisdiction For Your QROPS?

The local jurisdiction will set out how the local pension scheme is structured, however many QROPS follow a similar structure:

• There is a master trust set up which appoints a corporate trustee (the QROPS provider) and their powers, roles and responsibilities in terms of administering the QROPS.
• The trustee must be based outside the UK for the scheme to be considered as a QROPS.
• There are usually wide investment powers allowing flexibility for the trustee to invest in a wide range of assets – for example cash, bond, property, hedge, equity and commodity funds.
• The trustee of the QROPS holds these investments on the member’s behalf and has investment powers. They will often appoint an Investment Manager to switch investments on their behalf as market conditions change.
• The trustee would also be responsible for making payments of benefits from the QROPS to the member.

The local jurisdiction will have rules within local legislation and practice which need to be adhered to in order to qualify as a local pension. In addition, if the local provider would like to become a QROPS provider they must meet a number of HMRC rules relating to how and when benefits can be taken, along with defined reporting requirements while the member is UK resident and for five complete tax years after the member has left the UK. The rules of the scheme must be broadly equivalent in terms of payment of benefits to a UK-registered pension scheme to maintain their QROPS status.

I have attached a simple summary of the differences between three of the major QROPS jurisdictions; Isle of Man, Guernsey and Hong Kong. My current “favourites” are Guernsey and Hong Kong since they will not tax you on your pension if you live outside of the countries.
Contact me if you would like to learn more or if you are ready to see what benefits there may be for you personally.

Recommended QROPS Providers

I can personally recommend the following companies for their QROPS products and would be very happy to help you in your UK pension transfer arrangements. Please contact me with an outline of your existing arrangements and I shall help in any way I can.

Hansard International

Royal Skandia

Royal London 360

Premier Group

Which UK Pension Transfer Is Best For You?

If you have a frozen (or poorly performing) UK pension arrangement you may consider changing schemes. This is particularly the case if you are now expatriate or working abroad.

There are two different schemes that are open to you and which one you choose is based upon the simple question; “Are you likely to return to the UK or to stay overseas?”.

a) SIPP. If you are definitely going to return to the UK then you must chose a “Self Invested Personal Pension” or SIPP. I have found the Wikipedia entry Self Invested Personal Pension to be pretty informative for an overview of the scheme. Even the BBC Business page BBC –SIPPs Made Simple has some good information. My page UK SIPP Transfers will show you how I can help further.

b) QROPS. This is the scheme to use if you are likely to be staying away from the UK when you retire. The “Qualifying Recognised Overseas Pension Scheme” (QROPS) may offer you some huge benefits. The Wikipedia entry Qualifying Recognised Overseas Pension Schemes is not quite as good but it does give an overview. Much more information can be found on my page UK QROPS Transfers along with a list of recommended providers.

I’m available at all times for independent information at no obligation. Just contact me with an outline of your existing arrangements and questions and I shall do whatever I can to help.