SIPPS Pension Guide

Although SIPPs have been around for some time, they only began to gain popularity in 2006, when pension regulations were simplified. Now many people across Scotland are discovering the advantages of a SIPP, which can prove particularly useful to those wishing to invest in commercial or retail property.

What is a SIPP?

A Self Invested Personal Pension (SIPP) is a type of personal pension scheme that offers maximum flexibility, as it allows an individual to make their own choices regarding forms of investment, and how these investments are subsequently managed. Therefore rather than entrusting money to a single insurance company, SIPPS give you the opportunity to invest in a range of assets, including:-

Equities;
Investment trusts;
Unit trusts;
Commercial property;
Endowment policies and gilts.

What are the benefits of a SIPP?

SIPP pensions have two obvious benefits:-

1. Diversity

A SIPP pension is not limited as other personal pensions are; instead, a SIPP pension holder can invest in a number of different assets, creating a diverse portfolio. This allows you to spread the risk, as it one investment is not performing well, you can simply switch investments. Furthermore, you don’t have to change your contract to do this (and incur additional charges) as you would if you were switching your personal-pension provider.

2. Tax

SIPPS are also particularly tax efficient, as investments held in a SIPP are tax free. For example, rent earned from a commercial property will accumulate tax free, while capital gains tax will also not apply. This makes SIPPS extremely cost-effective.

And there any disadvantages?

Although the benefits are undeniable, the important thing to remember is that a SIPP will not suit everyone: that is why it is essential to do your research and seek independent advice from a pension expert. Indeed, SIPPS do carry a few disadvantages that need to be taken into consideration. For example, the charges (such as annual running charges) can be high, while the amount a retired individual can draw will be dependent upon the performance of his/her investments.

How can McKay Norwell help?

With a dedicated team commercial property lawyers, McKay Norwell can help with all SIPP property transactions. This form of investment is popular with businesses, as leasing premises from their own pension rather than from a third party has a number of cost-saving advantages.

Simply call us for a free assessment immediately on 0131 222 8000 or complete the enquiry form on the right of this page and we will be delighted to help you.