Could you get more for your money?
A Self-Invested Personal Pension (SIPP) is a flexible pension with favourable death benefits that allows individuals to make their own investment decisions from a wide range of different sources, including (but not limited to) stocks and shares, Unit Trusts and OEICs, and both Commercial and Residential Property.
Edgewater Associates works closely with a number of different providers, based in the Isle of Man and UK, and together we can help you consider whether a SIPP is appropriate to meet your retirement needs.
Why take out a SIPP?
Would you like to ‘semi-retire’ or reduce your hours to part-time at 50? Have you considered using part of your pension at age 50 to pay off your mortgage, reducing your outgoings and freeing up more of your monthly income? There are a number of benefits to taking out an Isle of Man SIPP. For many, the most important aspect is the protection of their pension assets for their family should they die after retirement. Thanks to the different drawdown options available with a SIPP, you do not need to purchase an annuity when you retire; your pension will remain invested and continue to grow, helping to preserve the capital value for your nominated beneficiaries. SIPPs also benefit from a much wider range of investment options that cannot be accessed through traditional personal pension plans held with insurance companies. In the Isle of Man, those with a SIPP can take benefits from the age of 50, and are entitled to take 30% of the fund as a tax-free lump sum with the rest as income to be taken immediately or deferred until a later date.
On the face of it, a SIPP may seem like a riskier and more complex option but this is not necessarily the case; in fact, in many instances, they can offer greater security to clients.
At Edgewater Associates, we assess our clients’ attitudes towards risk, including their capacity for loss, on a personalised basis so as to identify the appropriate investment solution for you.
- A tax-free lump sum (based on the fund value) can be taken at retirement
- Regardless of whether a tax-free lump sum is taken, a pension can start to be paid immediately or deferred until needed
- A wide range of investment choices and investment providers is available
- Flexible pension payments can be chosen, giving greater freedom to vary the level of income taken than a fixed annuity
- Personal contributions to the SIPP may be eligible for income tax relief
- On death, unlike a standard annuity, any remaining fund can be passed to nominated beneficiaries or to the member’s estate – less a small tax charge of 7.5% in the Isle of Man (compared to a minimum of 55% in the UK) if death occurs after benefits are drawn and no tax charge if death occurs before benefits are taken
- Individual members can be co-trustees of a Scheme, thereby taking considerable control over the investment strategy of the SIPP; it is also possible to create a ‘Family’ SIPP where couples pool their pensions to undertake larger investments and minimise costs
- SIPPs can be registered as a Recognised Overseas Pension Scheme (ROPS) with the UK HM Revenue & Customs (HMRC) to allow the transfer of benefits from the UK