Q: What is a Sipp?
Self-invested personal pensions were conceived back in 1989.
Then chancellor Nigel Lawson said Sipps should “make it easier for people in personal pension schemes to manage their own investments”.
Mary Stewart, director of Hornbuckle Mitchell, said many early sales were driven in particular by entrepreneurs and company directors bringing together their business and personal interests by buying their business premises with pension money and even now commercial property was a mainstay of Sipp business.
She said full-service Sipps allowing full investment flexibility (including borrowing) have been joined in recent years by simplified offerings from insurers and online providers that still allow member control but impose more limited investment options.
Ms Stewart said: “Many are Sipps by name, but not by nature...”
According to Billy Mackay, marketing director of AJ Bell, Sipps can be set up for children and these will typically be managed by one of the child’s parents or their adviser until the child reaches age 18.
Mr Mackday said the Sipp administrator takes care of the scheme’s legal requirements, and all of the tax reclaims and payments with HM Revenue & Customs.
Contributions, transfers and lump sum and pension benefits are governed by the same rules as all personal pensions, he added.
HMRC’s guidance on all this can be found here at http://www.hmrc.gov.uk/manuals/rpsmmanual/.
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