Apologies to the esteemed Mr Shakespeare, but when it came to writing lines that pass the test of time, he was undoubtedly the master. How much he knew about sophisticated financial packages, however, is debatable.
That said, another of his lines, that has also passed the test of time, is ‘Nothing will come of nothing’ – and this line perfectly sums up the current market. As you know, the modern day consumer demands control and flexibility when it comes to their pension arrangements.
Which is why a SIPP may be perfect. It puts you and your clients in control and allows investment in literally thousands of funds, commercial property, cash deposits to highlight just a few of the options. Of course, one of the best features of investing in any pension, including SIPPs, is the tax relief on the payments going in. The benefits of SIPPs are not just linked to savings and investment. Traditionally the 2 big downsides of investing in a pension has always been that the money isn’t available until retirement (from 2010, your client will have to wait until they are at least 55) and that the restriction on pension savings is that they must use most of their savings to buy an annuity – a lifetime retirement income.
These restrictions have put many people off investing in pensions, in particular the annuity rule.
The flexible retirement options available on SIPP are yet another example of how useful SIPPs can be, putting you and your clients in control to draw an income from their fund, rather than buy an annuity or indeed choosing not to draw an income at all.
The ability to take an income one year and switch it off in the next year allows detailed tax planning (for example, your client could turn off their SIPP income so that they can cash in another investment in the same tax year without creating a large capital gain).
So ‘To SIPP, or not to SIPP’ is not so much the question but a growing solution for many modern day consumers.
Tax and legislation are liable to change. This information is based on Standard Life’s current understanding of law and HM Revenue & Custom’s practice.
Tax rates and reliefs may be altered. The value of tax reliefs to the investor depends on their financial circumstances. No guarantees are given
regarding the effectiveness of any arrangements entered into on the basis of these comments.
Standard Life Assurance Limited, registered in Scotland (SC286833), Head Office Standard Life House 30 Lothian Road
Edinburgh EH1 2DH Tel (0131) 225 2552. Standard Life may recordand monitor telephone calls to help improve customer service.
The Standard Life group includes Standard Life Pension Funds Limited* SLTMLimited* Standard Life Investments (Mutual Funds) Limited*
*Authorised and regulated by the Financial Services Authority www.standardlife.co.uk
© Standard Life 2006
