Wrapping up
your pension

Do you want more control over where your money is invested?

Self-Invested Personal Pensions (SIPPs) were introduced in 1989 to give those planning for retirement greater control over where their pension fund is invested. Essentially, a SIPP is a pension wrapper that is capable of holding investments and providing you with the same tax advantages as other personal pension plans.

More control
You can choose from a number of different investments, unlike other traditional pension schemes, giving you control over where your money is invested. A SIPP offers the widest range of pension investments, including cash, equities (both UK and foreign), gilts, unit trusts, OEICS, hedge funds, investment trusts, real estate investment trusts, commercial property and land, traded endowment plans and options.

Carry forward
There is an annual maximum tax-relievable contribution level of £50,000 for 2011/12. You could contribute more, but would be taxed at your marginal rate. Commencing from the start of the 2011/12 tax year, it is now possible to carry forward any unused allowance from the previous three tax years (for this purpose the maximum allowance is £50,000 per tax year). We would strongly recommend that you obtain professional financial advice if you would like to utilise this option.
Pensionable income, including employment income, bonus, benefits in kind, self employment and partnership profits, can all be contributed. Pensionable income does not include investment income, rental income or pension income.
If you make a contribution that takes your taxable earnings below the higher
rate tax threshold, then the tax relief will be less than 40 per cent.

Other considerations
You cannot draw on a SIPP pension before age 55 and you need to spend time managing your investments.
Where investment is made in commercial property, you may have periods without rental income, and in some cases, the pension fund may need to sell on the property when the market is not at its strongest.
Because there may be many transactions moving investments around, the administrative costs are higher than those of a normal pension fund.

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