What you can put into a SIPPS
pension
Fixed interest / Inflation Proofing
In addition to the usual array of cash, bond and gilt options.
It is possible to add a bit of inflation-proofing
to your pension with index-linked savings products from
National Savings & Investments, the savings company backed
by the UK Government.
Its index-linked savings bond offer a set rate of interest,
plus an uplift equivalent to the Retail Price Index.
The difference inflation-proofing makes to cash savings
can be quite significant.
According to research, a five year savings bond paying
just 1.05% but index-linked (RPI of 3.6%), will actually
pay the equivalent of 7.58% gross to a higher rate tax payer,
and 5.69% gross to a basic rate tax payer.
And the usually touted drawback of restricted access (NS&I
bonds lock money away for two, three, five years) is not
an issue for pension savers, as pension money is locked
away until at least age 55.
Property
Only an idiot would chose to hold a residential property
in their pension fund, as there is a punitive 55% tax charge.
However the Financial Services Authority says it is still
possible to get exposure to residential property within
a SIPP through investment in a collective vehicle, such
as a offshore-listed property trust and
a real estate investment trust (REIT).
Not all SIPP providers offer access to property funds however,
so its important to check before signing up. Alternatively
a financial adviser will be able help track down a provider
which does.
For those who fancy something a little more quirky, it is
possible to own a hotel room through your pension or a holiday
home in France.
There are strict rules associated with holding these particular
investments, most notably that if you spend time in your
property you have to pay the going rent or room rate for
your stay, and it is only properties bought through the
official French Leaseback scheme, which qualify for UK SIPPs.
Read on
What else you can put into
a SIPPS pension
Direct property investment
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