“The core principle of self-invested personal pensions, or SIPPs is that they offer a wide range of investments, from low-risk, cash-based exchange traded funds to commercial property,” says Billy McKay, marketing director for specialist SIPP and small self-administered scheme(SSAS) pension schemes administrator, AJ Bell. These schemes are no longer just for the very wealthy or large professional practices. “Competition has driven administration charges down to the extent that SIPPs are now considered mainstream.”
Indeed, the Sipps market now comes in all manner of sizes; low-cost Sipps offer discounted access to hundreds, if not thousands of pension funds. T
he range of investment options make self-administered and self-invested schemes very worthy of consideration by entrepreneurs and growing businesses.
“You can use a SIPP fund to buy commercial property, including your own business premises,” McKay adds. “The attraction is that both the pension contribution and rental income are credited to the scheme.” Both are tax-deductible, which can give the business a double benefit. SIPPs aren’t limited to shareholders, directors or partners – possibly an advantage in attracting financially aware staff.
“Employees can invest, as well. The rules for contributions are identical, as are pension rights,” he said. And they won’t be dealing with a distant, impersonal office – administrators like A J Bell seek to provide a level of service well beyond the standard.
“SIPPs offer reasonable charges, probably the best service you can get and the widest range of possible investments. You can move between them easily, as market conditions or personal circumstances change.”
Given these advantages, it's perhaps no surprise that the Sipp market is booming; IFG Group recently predicted industry growth of between 10 and 25% per year. And with employers no longer having to claim their benefits by the age of 75, the market is set to become more flexible, and thus more attractive, than ever.