| | | Sipps pensions benifits
Over the past few years the pension industry has managed to score some great own goals. The biggest own goal was the mis-selling debacle. The Government inspired Stakeholder pension scheme has fallen way below expectations and stock market returns added to people feeling disillusioned with pensions in the UK. The Government are hoping that the new Sipps Pensions Scheme that is being launched in April 2006 does not fall into that category. Sipps have been around for a long time, there were first launched in the early 1990s and were initially seen as a fringe product that only appealed to the better off. In recent years fees have reduced substantially and Sipps are set to gain momentum with the loosing of pension regulation in April next year. John Lawson of Standard Life expects the Sipp Market to explode and predicts that £10 billion worth of buy to let property will be transferred into Sipps Pensions in the 12 months immediately after 6 th April 2006. Sipps Pensions benefit from the same tax relief and advantages that traditional pensions benefit from. Higher rate tax payers will receive 40% tax relief and lower rate tax payers will receive 22% tax relief. On retirement investors will have the same choices as traditional pensions- they will be allowed to take 25% of their pension fund as a lump free sum and then use the remainder for income drawdown. You will also be able to purchase a property under the Sipp umbrella by using funds form your current pension scheme. You can also leverage the value of the fund and borrow up to 50% of the funds value to help you buy a property.
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