How to hold cash in a SIPP

jm49

I am in the process of selling a £60k chunk of shares in my SIPP. I want to hold the proceeds in cash (I'm near retirement and don't want to take risks with the capital). Ideally I'd like to put the cash into, say, a 1-year bond such as the Nationwide current offer at 6.7%. But the SIPP Trustees say the Nationwide bond isn't set up in a way they can hold it as corporate trustees.

Any suggestions on similar products that are SIPP-friendly and pay a decent interest rate? All the Trustee accounts I can find so far pay miserable rates of interest (why is this?). The default position with my SIPP is that cash is held in an RBS account paying base-rate minus 1.875% - deeply unattractive.

I have an IFA, but he sensibly points out that if he advises me, by the time he has done all the due diligence, the fees will eat a sizeable chunk of the interest income.

EdInvestor

Don't forget you are getting the interest tax free.The reason SIPP cash account interest rates are not competitive is because the providers will be taking a fee from the interest.

There are some money market funds you might look at which can be used in a SIPP, though the rates will still not be as high as the best high interest accounts.In general though pensions are not designed to be invested in cash for any length of time, so there's little choice.

purch

You could buy a Gilt or other similarly rated Bond

Gilts don't yield much more than 4.6% for conventionals or maybe 4.75% for index linked with maturities of around 12 month from now

Supranational Bonds such as European Investment Bank yield about 50 basis points higher....5.20% for Dec 2008

AAA rated Bonds such as Transco or Tesco yield around 6%

There is an Alliance and Leicester 4.25 % Bond that matures in Dec 2008 that currently yields 7.68% at last nights close.............similar investment risk to the Nationwide ( but without the deposit guarantee of course, as it's not a retail product )

If you hold Bonds to maturity you don't need to heed price fluctations as your return is known at the outset

P.S. In my opinion the main benefit ( or at least one of the main... ) is the ability to buy a Bond or Gilt when close to retirement age to guarantee your pot