TAKING THE REINS OF RETIREMENT
Self Invested Personal Pensions (SIPP) offer unparalleled flexibility in controlling how and where your monies are invested, and when you begin to enjoy the benefits built having done so.
KEY TAKEAWAYS:
– Pension savings vehicle for lump sum or regular contributions
– SIPPs are one of the most effective tax reliefs available
– Investment flexibility allows savers to control their investing destiny
RELEVANT TO: UK AND US CITIZENS
SIPPs, in line with most pensions, come with tax benefits. For example, a contributions of £8,000 will be in line for a £2,000 further top up from the UK government. For higher rate tax earners, the relief can be even greater still.
PUBLIC SUPPORT
The public purse will further enhance your contributions by up to 45%, (in the case of Scottish rate payers, 47%), making SIPP contributions one of the most attractive tax reliefs there are. Over time, this can accrue to substantial pots to provide for a very comfortable retirement. Of course, no two individual’s tax circumstances are identical, and will be subject to changes in tax and pension legislation.
Testimonial:
There’s no ‘right age’ to begin saving for your retirement, but evidently the sooner the better to maximise the time that your portfolio can grow. Currently, (less any employer contributions), retirement savers can contribute up to £60,000 tax free, and your funds are secured until you reach 55 – (although the age at which you can withdraw benefits will rise to 57 in 2028).
ACCESS ALL AREAS
SIPP’s are available to anybody under the age of 75, and even non-earners can still benefit from tax relief for contributions up to £2,800 per annum. For far sighted parents, even whilst the benefits will not be available until retirement age is reached, Junior SIPPs are an option for children.
SIPPs offer a wide range of investing options – including equities, bonds, Exchange Traded Funds (ETF’s), mutual funds, investment trusts, Real Estate Investment Trusts, commodities inter alia. One of the few limitations is the ability to put residential property into them. However, either under one’s own steam, or with the help of a trusted adviser, an bespoke investment strategy can be crafted – one that is tailored to meet
DEFINING BENEFITS
The lifecycle of your retirement savings plan broadly encompasses two distinct phases – accumulation and decumulation – each will typically have a differentiated investment strategy too. During accumulation, the priority will be to maximise the growth profile of the pension, particularly in the early years. However, as time wears on, and the time to take benefits nears, a more conversative stance to the portfolio will become prudent. That is likely to mean increasing the allocation to defensive assets, or those with less volatility at the expense of more growth oritentated investments. Thereafter, in anticption to income withdrawals as pension benefits, a greater focus on income generating assets will likely become appropriate.
During the term, re-investing dividends can really put a tailwind in the growth of the pot, potentially outpacing some employer based schemes. There’s no restriction on employer’s paying into your SIPP, although many may offer employment based schemes which of course do not confer the same opportunity to customise the plan to your very own circumstances.
HOW CAN WE HELP?
Pension planning can be a complicated area of wealth planning, but with the right advice, you can take control of your retirement and have a significant influence on what that becomes.
