Cheapest Sipp: build yourself a low cost DIY pension article

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One important point that appears to be missing in the thread is the fact that there are in fact different kinds of SIPP, most providers offer a trustee based SIPP a few however offer a Private Managed Fund and one provider which offers a combination of the two. (Merchant Investors - https://www.merchant-investors.co.uk).

The two kinds of SIPP are quite different most importantly the private managed fund does seem to come with a much higher level of protection should the provider fail, that being 90% of the fund value where compared to the trustee based SIPP having only a £50,000 buffer.

Historicly this may not have been such a worry but with recent market fluctuations and businesses going in to receivership on a daily basis I think anyone considering a SIPP should bear this in mind.

Just my
My 2 cents.

ducky2004

Had been researching this and was initially fascinated by the tax efficiency of the Pension/Ltd company arrangement.

However, this would put it dead in the track- the typical HMRC attack on small business. It is called Wholly and Exclusively here:
http://www.taxation.co.uk/Articles/2006/02/09/50582/Hitting+the+wall.htm

So, as a Ltd company, if pension contribution is made fully by the Ltd company, each £1 the company earned will be retained as approximately £1 in the pension pot.

If it is first pay as salary to the shareholder-director-employee (due to wholly exclusive rule, and there probably needs to be some relation between the salary and the pension), then, the cost are:
£1 - 0.115 (NI) - 0.128 (NI) - 0.2 (income tax) =0.557
put the 0.557 in the pot and it becomes 0.69.
This comparing to Dividend / CT 20% route (£1 becomes 0.80, and no restriction),
pension for a shareholder-owner company may not actually be that interesting.

As for the other poster concern about actions of various HM government, as long as one intend to retire abroad, there is something called QROPS which allow the pension to be transferred abroad to a more 'friendly' jurisdictions. (Provided of course, HM Gov don't change the rule before one move abroad !)

MickKnipfler wrote: »

I'll be 48 in June. Being now self employed via a Ltd Co, I'm seriously considering a SIPP.

I worked 30yrs for BT and have a corporate final salary pension which being index linked will pay out equivelant of £18k per year from age 60.

I have 2 questions:

1) Where is the best SIPP deal if I want to invest in a mixture of FTSE and AIM listed stocks
2) Is it correct that my company can pay into the SIPP free of Corp tax/NI, at age 55, I can then take out 25% of the fund value tax free, the balance can then be withdrawn under PAYE equivilant taxation, on death, the balance is willable and isn't subject to IHT?

Chandy

Hi,

After a lot of scary losses in pension pot sizes recently, and with no sign of any improvement within the next couple of years, I want to move my entire pension into commodities, where I am confident it will be a lot safer. My provider has absolutely no commodity-based funds (which is crazy!) so it looks like my only option is to move to a SIPP. Now I have two questions:

1). If I move to the SIPP, can I move it all back to the group pension again in, say, three years?
2). Given I am not planning on holding shares in the SIPP, what would be my best choice of provider?

Thanks,

Craig

dunstonh

I want to move my entire pension into commodities, where I am confident it will be a lot safer.

What are you invested in at the moment? Must be very very high risk if you think commodoties will be safer.

My provider has absolutely no commodity-based funds (which is crazy!)

Because of the high risk nature of them, most basic pensions dont offer them (and stakeholders and legacy pensions certainly wont). With group schemes many employers insist on simple investment options.

so it looks like my only option is to move to a SIPP.

its not but it is one of the options.

1). If I move to the SIPP, can I move it all back to the group pension again in, say, three years?

if the group scheme allows it.

Chandy

(Can't see how to quote on this..)

I'm currently in a 'med-low risk' mixed bag of what seems to be junk..with only other junk to choose from. I'll clarify and say I actually want to move in all into physical gold for the next three years or so.

So what are my options apart from a SIPP? It was my current provider (Standard Life) who advised the SIPP route.

Thanks.

GTG

Chandy wrote: »

(Can't see how to quote on this..)

I'm currently in a 'med-low risk' mixed bag of what seems to be junk..with only other junk to choose from. I'll clarify and say I actually want to move in all into physical gold for the next three years or so.

So what are my options apart from a SIPP? It was my current provider (Standard Life) who advised the SIPP route.

Thanks.

http://goldmoney.com/en/gold-sipp.html

If you wish to go ahead contact Lauren Cairns at Berkeley Burke, if you would like to say where you heard of BB you may like to mention my name - Rob (I do not receive anything for referrals)

Perfect_Choice

There are 2 common commodity based funds popular with investors namely Blackrock Gold and General and JPM Natural Resources. I can access these funds from both my sippdeal account and my Skandia pension so a good multi market pension provider should give you access to such funds.

There are other specialist commodity funds available such as the BAC fund based in Switzerland which specialises in PGM based commodities (platinum, etc), plus ETF or owning direct metal or company shares of course, but I prefer a more broad based commodity approach.

Commodities have had a tough time recently as would be expected with the economic downturn so be careful on timing and what you invest in for risk management.

However I see a huge potential for growth once economic recovery starts to boost demand due to the forced closure of mines and reduce exploration investment on replacement capacity, especially relevant for PGMs where I have focused and made good money. I actually have no commodity investment right now myself but plan to change that later this year, it is all about timing to achieve those maximum gains.

greenflamingo_2

Hi all
I have been contributing to my company pension scheme for the past 20+ years. Basically there are more pensioners than contributors to the scheme and those contributors that remain are regularly made redundant.

I think I could do better with it that the current Pension administrators.

As my ex employer no longer contributes and my pension is effectively frozen I would like to transfer over to a SIPP. I do have experience of dealing in shares - at least 5/10 trades per day and would like a SIPP which gives me access to aim/FTSE shares.

1. Would there be penalties if I transferred my pension in view of my circumstances?
2. Could I withdraw 25% at age 55?
3. I will be trading regular within the SIPP and not keeping much cash

I did ask to get some financial advice but was quoted £2,000K and as I only have £25K in the pension that was really not an option so trying to sort it myself but seems a minefield!

Any help appreciated.

dunstonh

I think I could do better with it that the current Pension administrators.

You dont have the same liabilities to worry about.

1. Would there be penalties if I transferred my pension in view of my circumstances?

almost certainly

2. Could I withdraw 25% at age 55?

from the personal pension, yes. The occ scheme itself though is unlikely.

I did ask to get some financial advice but was quoted £2,000K and as I only have £25K in the pension that was really not an option so trying to sort it myself but seems a minefield!

£200,000 fee is a little over the top somewhat If you mean £2000 then thats about the going rate for a final salary scheme pension transfer due to the higher qualifications required and the higher risk nature of the transaction. Virtually all receiving pensions require an IFA to sign off on the transfer and won't let you do it without it due to the statistically high odds of what you want to do being the incorrect thing to do.

ptroke

Between 1977 and 2005 I was in continuous local authority employment and paying into the teacher's pension scheme. In 2005 I took voluntary redundancy and am now self-employed. I left my accrued teacher's pension where it was - with some sort of property investment in mind with the changes in pension rules (the SIPP that can now not invest in buy-to-let). I see the point about using ISA's for savings now, but would it be worth considering a move to a SIPP for my old/frozen plan?