Self Invested Personal Pensions
It is important to remember that Self-Invested Personal Pension Plans are, in essence, just Personal Pension Plans. The fundemental difference is that through a SIPP, individuals can literally become their own fund managers and have the facility to invest outside the insured contracts within a pension wrapper.
In the new simplified world of pensions from A-Day (6th April 2006) investment choice and flexibility are likely to be even more appealing. One thing is certain: SIPPs have been thrown in to the spotlight and the growth and popularity of these contracts is widely expected.
What follows are a brief overview of the new rules.
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Contribution Limits
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£235,000 (2008-9) rising to £255,000 (2010-11).
No limit in year before retirement.
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Relevant earnings needed
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Yes, for contribution over £3,600 gross pa
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Minimum Retirement Age
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50 increasing to 55 by 2010
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Maximum Retirement Age
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75
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Pension Commencement Lump Sum (Tax Free Cash)
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25% Fund
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Pension Limits
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Total value of all pensions subject to Lifetime Allowance
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Loans to business' members
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50% of fund, max term 5 years, secured
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Property investment and fund borrowings
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Invest in commercial property but will incur tax charges when investing in residential property. Borrowing limited to 50% of fund value
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Shares in own Company
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Unlimited
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Over Funding
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55% Tax Charge
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Drawdown
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Up to age 75. Alternatively secured pension after age 75
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Attached is a PDF available for download, providing a comprehensive overview and background to the new rules and regulations.