SIPPs Pensions Guide
What are Sipps?
Sipps stands for "self-invested personal pensions". These are a 'do-it-yourself' form of pension that allows an individual to make his or her own investments into a personal pension pot.
They have been available since 1989 and, in rules laid down in 2005 by the chancellor - rules that, from April 2006, aimed to simplify the pension system - it seemed that it would be possible to invest almost anything into Sipps - such as works of art, antiques, wine, yachts and any other valuable asset, including, of course, cash and shares.
What attracted most attention, though, was the fact that from April 2006 it would also be possible to buy property through a Sipp, with a hefty tax break to help.
However, on November 30 2005, the Chancellor, fearing that the wealthy might take unfair advantage of the new freedom to invest in Sipps, performed a complete U-turn, effectively banning these new investments.
Then, in another abrupt change of heart, the Chancellor in a subsequent speech launching the new pension rules decided to reinstate residential property in Sipps.
The reason for this is fairly simple: the Government is worried that most people are not doing enough at the moment to provide for their retirement and wants to encourage more people to save more in their pension funds in future.
It thinks that by relaxing the pension rules it can achieve this and ensure that fewer people spend their old age in poverty.
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