The main difference is that with a SIPP, the client has more flexibility with the investments they can choose.
With standard personal pension schemes, the client’s investments are managed for them within the pooled fund they have chosen. SIPPs give a client the freedom to choose and manage their own investments. SIPPs are designed for clients who want to manage their own fund by dealing with, and switching, their investments when they want to. The wider investment powers can allow investment into a wide range of assets, including:
A SIPP can also borrow money to purchase certain investments. For example, a SIPP can raise a mortgage to part-fund the purchase of a property. Such properties would normally then be rented out and the rental income, received by the SIPP, can be used towards servicing the mortgage repayments and the costs of running the property.
A pension is a long term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Pension income could also be affected by interest rates at the time benefits are taken.
The tax treatment of pensions in general and tax implications of pension withdrawals will be based on individual circumstances, tax legislation and regulation, which are subject to change in the future.
Consilio Consulting offers advice to clients on a wide range of financial services including the following:
At Consilio Consulting, we provide comprehensive tax-efficient financial planning services for High Net Worth private and Corporate clients. We will work with you to understand your current position and financial goals. We will then build a bespoke solution utilising our expertise in a number of core areas.
Read MoreOur work at Consilio Consulting brings us into contact with companies of all sizes across the UK. How you structure your financial affairs can have a significant impact on the amount of tax you pay, both within your company and personally.
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