Alliance Trust Savings has launched a webcast and bulletin for advisers, highlighting pros and cons they should consider when advising on investing in shares of unquoted companies in a SIPP.
The factsheet and webcast also detail the process involved in making this type of investment in a SIPP as well as taxation issues including avoiding charges on taxable property.
Steve Latto, pensions development manager, says: “Investing in unquoted shares can be ideal for those with a large pension fund who have an appetite for risk and are looking for an investment that has significant growth potential.”
Latto believes they can also be a good investment opportunity for employees, allowing them to access the tax advantages that come with a pension.
“If an adviser's client already invests in unquoted shares in their own name, they may want to move them into a SIPP to take advantage of the tax-friendly environment of a pension. This will also provide people with protection from capital gains tax.”
Two of the biggest considerations advisers need to make when advising clients on these investments are how will voting rights be addressed and whether the liquidity of the pension fund will be an issue, says Latto.
“As the trustee of the SIPP will be the shareholder, advisers need to understand how the trustee will deal with any voting rights attached to the shares, as these are often of great importance when investing in unquoted companies.
“Also advisers need to evaluate the liquidity of the SIPP and its ability to sell the shares, particularly if the SIPP needs to pay out benefits."
The pensions bulletin, “SIPPs: investment in unquoted shares” and the webcast, is available to advisers at: www.alliancetrust.co.uk/adviser
Paul Bruns and Elaine Parkes
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