Why buy real estate with SIPPs?
SIPPs, or Self Invested Personal Pensions, were once a niche product for the highly wealthy, but today they are one of the most accessible and popular investment vehicles available. Indeed, the ability to use SIPPs to invest in real estate has, some would argue, significantly helped to ease the UK pensions crisis, encouraging more people than ever before to adequately save for their retirement. Here, Crown World (http://www.crownworld.com/) looks at the attraction of SIPPs.
First, just what is a SIPP? A SIPP (Self Invested Personal Pension) is a type of personal pension which provides a tax-efficient way of saving for retirement - one which allows the investor to select and manage their investments with more control than with ordinary personal pensions. The range of investment options available within a SIPP (UK and overseas property and land investments; UK and overseas equities; cash; gilts; unit trusts; investment trusts; commercial property, etc.) allows an individual to invest across all asset classes. SIPPs can also be held alongside other pension schemes and usually offer more options when it comes to taking retirement benefits. Upon death, the entire fund amount of the SIPP can be passed on to anyone specified in a will, without incurring inheritance tax.
Let’s look at why SIPPs have become so popular in the UK. The benefit of being able to control one’s retirement through SIPPs cannot be underestimated, in part because control is unfortunately not a word normally associated with pensions in the UK. Failing private sector pensions, corporate mis-management of employee’s personal pensions and a state pension which has been revealed to be the least generous in the Western World has left the UK in a pensions crisis. SIPPs allow the investor to gain more control over how their pensions are invested, no longer having to rely on the whims of a pensions fund manager, but being able to personally choose from multiple investment vehicles and even transfer existing or ‘frozen’ pensions from employers into their SIPP. SIPPs are also highly tax-efficient: they allow for multiple contributions and are entitled to full income tax relief.
Finally, SIPPs are far more flexible than standard pension schemes, particularly since April 2005 when investors could begin to use SIPPs to invest in UK and overseas property and land. Real estate investment is perennially popular, and the ability to invest in real estate within a self-invested personal pension has benefitted many an investor. Here at Crown, many of our clients choose to use their SIPPs to take advantage of lucrative land investments in the Cayman Islands, maximising their return on investment while helping to secure a comfortable retirement.
Indeed, it is the control, choice, flexibility and tax efficiency offered by SIPPs which, when combined, make for a more comfortable retirement for many investors. Find out more about how people are using SIPPs to buy land in the Cayman Islands at http://www.crownworld.com/.