Property pension advice. Why use a property SIPP?

SIPPs have proved highly popular since their launch in 1990. Here are some of the main reasons why people choose to plan for their retirement with SIPPs:

Tax efficiency

SIPPs offer tax efficiency in a number of ways:

• Tax relief – the UK government will pay you tax relief on your SIPP contribution at the rate of 20%.
• Income Tax and Capital Gains Tax exempt – SIPPs investments are not subject to Income Tax or Capital Gains Tax, allowing your pension fund to grow more quickly.
• Tax free lump sum – upon reaching retirement age, you can take 25% of the value of your SIPP at that time as a tax free lump sum, giving your retirement a welcome initial cash boost.

Investment choice

Once it was only the very wealthy who could invest in the full range of asset classes, with the rest of the population having to save for their retirement within the limited choices offered by pension fund managers. SIPPs has changed that – now all investors can benefit from a wide range of investment choices, guided by an IFA who will choose the right vehicle for them.

In April 2005, investors could begin to use SIPPs to invest in UK and overseas property and land. Opening up real estate investment within retirement planning has led to more people saving for their future then ever before.

Pension consolidation

SIPPs are sometimes referred to as pension ‘wrappers’ because they wrap up a number of pensions within one easy to manage vehicle. Consolidating your pensions into one place makes retirement planning more straightforward than ever before.

Easing the UK pensions crisis

SIPPs are ideal for the current economic conditions. This is a time when the UK is facing a pensions crisis, with an ageing population, not enough people saving for retirement, failing private sector pensions and a state pension which is the least generous in the Western World.

The Basic State Pension in the UK for the 2011/2012 tax year offers a maximum weekly payment of only £102.15 for single people and £163.35 for married couples. SIPPs allow you to save for the kind of retirement you want to have, offering a pension fund which is flexible, which you can control, and which grows steadily and tax efficiently.