03/05/18Go on……take a Sipp……
This week, I’ve been amazed at the amount of calls I’ve had from potential new clients, wanting to take out a Self-Invested Pension Plan (you got it, a SiPP), because either they’ve heard a bloke in the pub talk about it (yes, really!) or they’ve read a column of a financial journalist who apparently was spouting the benefits of having one.
One person even said to me “according to the article, a SiPP is the only way you can pay in excess of £40,000 into a pension in one tax year, allowing you to make up for all the years you missed whilst building a business – no other pension will let you do this”
This last point had me frantically searching the internet for the article – the person I was speaking to could not recall the journalists’ name – because if that is what was written, it’s utter bunkum and the journalist deserves to be outed. But I suspect, it is what the person I was speaking to wanted to read, rather than what was written.
First and foremost, the only way you can make up for missed years, is by having a Pension Plan that you could have paid into, but due to lack of funds.
Having a Personal Pension Plan, Stakeholder Pension Plan, Group Personal Pension Plan, even some workplace pension schemes, could make this is a possibility. Even then, the “missed years” are restricted to the current tax year and three previous years, providing of course, in each of those preceding years, there was a pension available, that you could have paid into, so going back to 2016, when the pension scheme you have was set up in 2017, is not possible.
As for contribution levels, well there are rules and it depends on who is paying the contribution. The rules can be complex and go beyond the scope of this blog.
A SiPP – in my professional opinion – is more for those ‘experienced’ investors, who want to explore more complex investment strategies, own individual shares of traded companies and look to purchase commercial property. They can also attract higher plan fees due to what they are designed for. It’s a bit like having an Audi R8 and driving it to your local shop to buy a newspaper, when an Audi A1 will do the job just fine (other cars are available!)
For the vast majority, a Workplace, Stakeholder or Personal Pension Plan will work just fine until you, buy individual stocks and shares from any recognised world share index or by a commercial premises (office, Hotel, B&B as examples)
So don’t be in a rush to take a SiPP, Talk to me first and you’ll be able to enjoy large measures of something that is made to your individual taste.
This blog is not designed to be advice, but to make you think about retirement planning as a whole and to hopefully make you want to speak to Victor. A pension is a long-term investment. The fund value may fluctuate and can go down as well as up. Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.
Victor Sacks is an independent financial Adviser and company director of VS Associates Limited.