From October 2008, Protected Rights funds can be accepted into SIPPS and can enjoy the full investment options enjoyed by full SIPPs.

The MW SIPP structures is a full SIPP and will accept Protected Rights transfers and contributions and will permit the investment of these funds into the full spectrum of investments permitted by HMRC, including property.

To see more information please click on the links below:-

• Protected Rights
  
  
• Clients’ Guide to Protected Rights

SIPPs have been around for some time but have gained in popularity in recent years. This has gathered momentum since A Day, with the result that SIPPs have entered the mainstream.

There has also been an increase in SIPP Providers. It should be stated that SIPPs are not for everybody and in many instances other types of pension may be more suitable, especially if only limited investment options are required.

• It is a simple structure
• There are generous tax benefits
• You control your own destiny
• There is freedom of investment (but watch the rules)
• It is now easier to make substantial contributions
• Most people are eligible for one (even babies)
• Ideal way to build wealth over the long term in a tax free environment

As the market has grown so it has also changed - as markets always do, with the average fund value dropping. Once, the SIPP was the preserve of the high net-worth individual and whilst that segment of the market continues to grow, the growth in smaller funds is significantly greater. Since the main objective of “simplification” was to get more people to take responsibility for their retirement, this development is unsurprising.

There has been a marked increase in SIPP contributions, with some SIPPs being specifically set up for that purpose

There are a number of different types of SIPP and care should be taken in selecting an appropriate structure.

This offers the full range of SIPP investments and is not “tied" to any institution like an insurance company or stockbroker. Even so, some such SIPPs will nevertheless not permit "non-standard" investments such as overseas property or unquoted shares.

Hybrid SIPP

These are often insured SIPPs. They often permit investments limited to their own range of funds or products, and therefore lose the full spectrum of investment choice. SIPPs marketed by investment houses often won’t allow property investment

Online SIPP

Often marketed as a low cost SIPP where all investments are transacted by the member or his adviser online. Often won’t permit, for example, Property investments.

Fees

Some caution should be exercised here. Often ‘headline fees’ (for set up and annual management) may seem very low, or even free, the fee structure can be riddled with transaction charges, fund management costs or commissions, which soon mount up. Some charge for signing cheques! Others pay a poor rate of interest on cash balances, keeping the extra interest as a "hidden" fee - see below

Interest paid on cash deposits

Recent research has indicated that many SIPP providers are not offering their members a very good rate of interest on cash balances – 1% below base is not untypical. A large proportion of SIPP funds are kept in cash – possibly 25%. This is yet another area where a little homework may bear dividends.

The MW SIPP is a Full SIPP which allows the full range of tax free investments now allowed by HMRC. We charge a fixed fee that includes everything that a member requires on a regular basis. There are no transaction charges, no commissions and no small print. Advisers and clients can elect to place their cash with any recognised banking institution. £1,000 must remain in a SIPP Bank account.

We have a number of downloadable leaflets below. Please click on the one you want to download and print. In addition, there is a whole area of this website devoted to SIPPs where a wealth of additional information and downloadable leaflets can be found. You can access this by scrolling down or by clicking on the menu at the bottom of the page.

SIPPs Explained
SIPP Borrowing
SIPP Lending
The Annual Allowance and the MW SIPP
Why the MW SIPP?
Protected Rights September 08
The Role of the Trustee and Scheme Administrator
CLIENTS GUIDE TO PROTECTED RIGHTS

For other topics such as property or syndicates, please use the relevant link on the menu at the bottom of the page.

MW Acorn SIPP

This is a “starter” SIPP aimed at helping smaller funds to build up into larger funds over time. It is a low cost option with no set up fee and a simple charging structure. There are no transaction charges for transfers or contributions. For more detail or to register for this, please click on MW Acorn SIPP in the menu on the right.

MW SIPP For Platforms
We have launched a SIPP specifically for use with a choice of platforms/wraps, to take advantage of newer developments in technology. Because of the reduction in administrative workload we are able to offer this SIPP at a very competitive fee level. For details see link below.

DRAWDOWN

Once you have reached age 50 (55 in 2010), it is possible to take income from your SIPP. The income can be a figure chosen by an individual, with advice from a qualified adviser, and can be any amount between a stipulated minimum and maximum. The minimum is zero. However you must start taking benefits at age 75.

It is also possible to take a 25% tax free lump sum.

Many people take drawdown as an alternative to purchasing an annuity.

There are risks associated with Drawdown which must be taken into account which can affect your future income. We don’t give advice and you must take financial advice before taking any decisions.

See the risk warnings on this site by clicking on ‘risk warnings’ on the menu at the bottom of the screen.

If you want more detail on Drawdown, please click on the link below:-

Drawdown Options
Flexible Drawdown

KEY FACTS

Risk Warnings

Transfers in – by transferring other pension benefits into your SIPP you may be giving up the right to guarantees in the form of benefits, the amount you will receive and also the level of increases that will be applied to your pension in future.

You may be giving up the right to receive a terminal bonus on with-profit pension plans.

A penalty may be applied to your current pension plan if it is transferred.

We offer an execution-only service, and as such we do not provide advice, we would recommend that you seek advice from a suitably qualified financial adviser if you are considering transferring existing pension benefits into a SIPP.

Investments – the value of investments can fall as well as rise and is not guaranteed. Past performance is no guide to future performance.

There is extra risk of losing money when shares are bought in some smaller companies including penny shares. There may be a big difference between the buying price and the selling price of these shares. If they have to be sold immediately, you may get back less than you paid for them.

The price of investments may change quickly and can go down as well as up.

You will be able to deal in a range of investments each of which carries a different level of risk.

The cost effectiveness of your SIPP may depend on a number of factors, including :

• The size of your SIPP in relation to the initial and ongoing costs (including our charges, which may increase in future)
• The type of investments held
• The frequency with which you deal
• The size of transaction you undertake

Multiple investments and frequent dealing in small amounts may also result in excessive costs.

We do not make investment recommendations. Any investment information is provided solely to enable you to make your own investment decisions and must not be treated as solicitation or recommendation to buy, sell or otherwise deal in any particular investment.

Some of these risks may not be relevant to your SIPP, depending on the investment strategy you have chosen.

Income Withdrawal – taking income withdrawal may erode the capital value of your fund,especially if investment returns are poor and a high level of income is taken; this could result in lower income than anticipated in the future.

If income withdrawals new, or at, the maximum permitted by HMRC are taken, such income withdrawals may not be sustainable. The higher the pension you choose to receive, the higher the probability that your pension may have to reduce in the future.

If you choose to receive your pension via income withdrawal, there is no longer a requirement to purchase an annuity by your 75th birthday. If you continue income withdrawal after age 75 the maximum permitted by HMRC will reduce significantly. The benefits payable on your death will be more restricted and the remaining fund on your death will be subject to inheritance tax.

The investment returns on your fund may be less than those shown in any illustrations you may receive from us, or obtain yourself using calculation tools.

There is no guaranteed that annuity rates will improve in the future. If you choose to purchase an annuity, the level of pension you receive when you purchase the annuity may be lower or higher than the pension previously being paid under income withdrawal and /or the annuity you could have purchased initially.

General - the tax benefits and governing law for SIPPs may change in the future.

Your benefits are dependent upon a number of factors, such as future contribution levels, the age at which you commence benefits and external influences such as investment returns, inflation, interest rates, annuity rates and charges.

You will not normally be able to commence benefits until you reach the minimum pension age of 50, 55 if benefits commence after 5th April 2010.

The SIPP is offered on an execution-only basis without pensions advice. For further clarification and to obtain advice regarding the suitability of a SIPP you should seek professional advice from a suitably qualified financial adviser.

Complaints

Should you have a complaint you should write to the Compliance Officer at :

MW Pensions Ltd
Oaklands Business Park
Hooton Road
Hooton
South Wirral CH66 7NZ

Tel.0151 328 1777

The information contained in this documents is provided based on our understanding of current law and practice and taxation which may be subject to change.

The law of England and Wales will apply in all legal disputes.

SIPP INVESTMENT RULES

This is a major change under the new Rules. Effectively the concept of “permitted investments” is now defunct. This has been replaced by tax free investments and taxable investments. And for taxable read ‘punitive’. So you can invest in anything you want but the penalties may be prohibitive. Amongst tax free investments are:

• Any quoted investments like stocks and shares
  
  
• OFEX and AIM quoted shares
  
  
• Gold bullion
  
  
• Cash
  
  
• OEIC/Bonds/unit and investment trusts
  
  
• Commercial property
  
  
• Residential property (including overseas) in a “suitably diverse commercial vehicle”
  
  
• REITS
  
  
• Insurance funds

Other items, classed as tangible movable property, will be heavily taxed, but are not excluded as investments. Extreme care will need to be taken over investments that are not regarded as “mainstream”, especially where connected parties are involved. In these instances, a tax charge of 55% on the fund may be levied.

Residential property is covered elsewhere on this page. If you want to see this section click here.

SIPP BORROWING AND LENDING

The following information relates to both SIPP and SSAS. There are some slight differences that affect SSAS which are covered more completely in the SSAS area of this site.

BORROWING

It’s possible to borrow up to 50% of the fund’s net asset. This applies to total borrowings, so if there’s already borrowing of 25% of the fund, you can only borrow a further 25%, unless of course you make further contributions.

Short term borrowing for VAT on a property purchase is included in the 50% limit. Borrowings must be on normal commercial terms, which can include interest only. It can be used for a wide range of purposes, but most typically, for investment in property.

For more detail click on the following download

Borrowing

LENDING

A SIPP can lend money to an unconnected party – either individual or company. It cannot lend to a connected party. Up to 50% of the net asset can be loaned for up to 5 years, but there must be adequate security. Interest is payable at a minimum of 1% above base.

For more detail click on the following download

Lending

SIPP CONTRIBUTIONS

You can now make unlimited contributions into a SIPP, but there is a limit to the amount on which you can get tax relief in any given year. This limit is called the Annual Allowance, and is £215,000 in 2006/2007. This rises each year, to £255,000 in 2010/2011. This will be £50,000 for 2011/2012. The figures for later years will be reviewed by the Treasury. If the allowance is breached in any given year the excess will be taxed at 40%.

The amount an individual can contribute is based on relevant UK earnings. It is possible to make a contribution of 100% of that figure tax free up to a maximum of £215,000. Contributions can also be made by employers or third parties, and there are Corporation Tax benefits for any employers who do this. It is also possible for non-taxpayers to make contributions into SIPPs and also get tax relief from HMRC.

Members of company schemes can now have SIPPs too (whilst remaining in their company scheme) and there are instances of individuals putting their bonus or AVC into a SIPP while still contributing into a company scheme so as to be able, for instance, to invest in property. Note that the Annual Allowance still applies to their total contributions to all their pension schemes.

Any personal contributions are paid in net of basic rate tax and reclaimed by the scheme administrator direct from HMRC.

For more detail click onto the following download



Salary Sacrifice

SIPP ANNUAL ALLOWANCES

The maximum tax free amounts you can contribute in a year are:

2006/2007	£215,000
2007/2008	£225,000
2008/2009	£235,000
2009/2010	£245,000
2010/2011	£255,000

LIFETIME ALLOWANCE

There is an upper limit on the amount you can hold tax free in a pension fund. This is the Lifetime Allowance and is currently £1.5m in total. This rises to £1.8m in 2010/2011. If you exceed the limit the fund will be liable to a tax charge of 55% on the excess This has been reduced to £1.5m from April 2012.

It is possible to take out protection on any excess or projected excess. You should consult an IFA.

For more detail click on the following downloads

SIPPs Explained

The Lifetime Allowance and the MW SIPP

IN SPECIE CONTRIBUTIONS

The rules governing this were changed during 2007, with the result that the transaction has become far more complex.

See our leaflet below

In Specie Contributions

Benefit payments can also be taken “in specie” as can transfers to and from other pension arrangements

For more detail click on the following download

SIPP Contributions
June 07 Newsletter

SIPP TRANSFERS

It is possible to transfer benefits from another registered pension scheme into a SIPP if, for example:

• You wish to consolidate all your funds
• You wish to have more control
• You believe it is possible to get better growth
• You want to invest in property
• You’ve lost faith in insurance companies

ALTERNATIVELY SECURED PENSIONS (ASP)

As anticipated, the Pre Budget Report in December 2006 introduced a new draconion taxation approach to ASP. It stopped short of completely removing ASP but the taxation now makes it extremely costly. The new position from April 2007 is:

• It is an alternative to buying an annuity at age 75
• Requires an annual drawdown calculation using GAD tables
• Members can take drawdown between 65% and 90% of calculated figure

• To charity, with no tax charge
• To another member of the same scheme subject to 40% IHT
• The residual 60% is then liable to a charge of 40% charge and further surcharges of up to 30%

DEATH BENEFITS IN A SIPP

There are a number of factors to take into account if the security of the family is an issue for you. As there is no need to buy an annuity at age 75 careful planning needs to take place to manage your fund and your tax situation. There will always be a surplus in your fund on death under the new rules. The PBR on 6/12/06 greatly increased the potential tax on ASP to 82%.

The main areas of consideration are:

• Death before drawing retirement benefits
• Death whilst in income drawdown
• Death whilst in phased retirement

It is an ideal vehicle to invest in commercial property. All rental income is received gross, ie no Income Tax, and when the property is sold, no Capital Gains Tax is payable.

Currently commercial property is an approved investment - remember that a SIPP can take out a mortgage! This they can do by setting up a SIPP now and making contributions, both company and/or personal, and transferring funds from other schemes or insured arrangements. They should take advice about this and also about how to manage any Capital Gains Tax they may already have accumulated.

We are specialists in property SIPPs, especially in property syndication, which is becoming increasingly popular. This is where groups of people, for example professional partners, collectively buy property, often their own premises. Increasingly "unconnected" investors are being brought together by an IFA to form property investment SIPP syndicates. The benefits of this approach are that it is possible to buy larger properties, with better leases and tenants and also to share costs.

If required we can introduce you to lawyers who specialise in property syndication and commercial property conveyancing.

Unlike most SIPP providers, we are not tied to any specific bank. We have excellent relationships with a number of high street banks who provide high interest current access bank accounts and competitive and flexible mortgages. Alternatively the client can use their own bank.

We have a number of SIPP Property leaflets.

borrowing
Role of Trustee and Scheme Administrator
Guide to Property Purchase and Lease
SIPPS Explained
Insurance Criteria

Two days after the Budget 2006, HMRC released details of how direct residential property holdings can be held within SIPPs/SSASs, free of tax.

For the first time, as promised, they also defined "residential" as follows;-

• building or structure used or suitable as a dwelling
• includes associated land, for example, garden
• anything classed as "residential" in building regulations
• a beach hut
• timeshare
• part ownership of, for example, a hotel allowing personal use /room access
• however ownership of entire hotel is commercial
• individual student lets but not Halls of Residence which are commercial
• Residential care homes, hospitals, prisons etc are commercial
• Shop with connected flat is commercial if the lease allows that the shopkeeper lives there

However if a commercial property is converted to residential it can still be held while the conversion is taking place but must be sold before the issuing of a Certificate of Habitation.

After the Chancellor's Pre Budget Report in December 2005, when residential property, UK and overseas were effectively barred (or more accurately could be included subject to a punitive tax charge) from SIPP/SSAS investment, an attack of commonsense appears to have broken out.

The details above, and what follows, appeared on the HMRC website on 24th March and has since been included in the Finance Bill 2006. This became law on 19th July in the Finance Act 2006.

SIPPs and SSASs can invest in residential property via "a genuinely diverse commercial vehicle". This includes REITs and arms length trading vehicles, but to focus on direct Residential property investment this is now possible, enjoying the full tax benefits, providing:

• the total asset value is £1m or there are at least 3 properties
• there is no chance of personal use
• no member or a connected party owns more than 10% of the total
• no single property is more than 40% of the total asset
• it must not be a close company in the UK or its equivalent structure Overseas
• it can't have as a secondary aim the ownership of an animal for sport - no stables!

This obviously opens up a wealth of opportunities for investors, property developers and advisers. If you would like know more about syndicate and portfolio services click here

HMRC make it clear that SIPP/SSAS investment in off-plan Residential development is acceptable, but as above the property must be sold before a Certificate of Habitation, (or its local equivalent) is issued. A further issue to bear in mind is that SIPPs/SSASs are not allowed to "trade"

If you want to know more about the above, please click on the relevant download below

March 2006 Residential Property
Finance Bill 2006
residential property
Insurance Criteria
borrowing
Guide to Property Purchase and Lease

Property Syndication is where a number of SIPPS club together to invest in a bigger property, often a group of business partners or directors buying their own premises. However, there is an increase in the number of Syndicates of "unconnected parties", often brought together by an IFA who takes an annual fee for managing the Syndicate on an ongoing basis. We have excellent contacts with solicitors who are specialists in drawing up Syndicate Agreements and we have agreed a template with them. Typically, the "Exit Plan" for Syndicate members is the most important aspect of the Agreement. This needs to be agreed by all members in advance, otherwise relationships can become damaged, if it has not been considered.

Under the Finance Act 2004, the amount that can be borrowed under a SIPP is going to change from 6th April 2006. Currently you can borrow up to 75% of the property value. This changes to 50% of the Fund - a significant reduction in gearing. We believe that this will increase the need for Syndicates.

One of the major advantages of Syndication is it allows the member SIPPS to invest in larger properties with better tenants, covenants and returns.

We have a number of Property Syndicate leaflets.

Insurance Criteria
Borrowing
SIPP Property Syndicates

Basically, they’re Personal Pensions – individual pension pots, which can be grouped together, like a GPP, for employers who want to provide their work force with a pension as part of their benefits package.

Where they differ from a GPP is that pensions can be really tailored for the workforce of a particular company so that different categories of employee (or even individual employees) can benefit from the freedom of investment and flexibility offered by a SIPP structure

There has been a move (stampede?) away from conventional pension arrangements, mainly on the grounds of costs, disappointing investment returns (eg with profit policies) and regulatory and legislative burdens (themselves costly), which are becoming increasingly onerous with each passing year.

In addition, demographic changes are taking place, whereby the workforce has, of necessity, become more mobile with changing working patterns. These are already well established and will continue apace, with ever-increasing life expectancy and later / flexible retirement coming more into play.

A different type of scheme that recognises these changes is required, and that is precisely one of the things CSIPP does.

CSIPP can be a suitable alternative to:-

• Occupational Money Purchase Schemes
  
  
• Additional Voluntary Contributions
  
  
• Group Personal Pensions

In short CSIPP offers:

• Great flexibility
• Extensive investment choice, as advised by the IFA as being suitable for that class of employee
• Controllable forecastable and capped costs
• Can be truly tailored to an individual employer’s needs

What are the benefits of a CSIPP?

For an employer:

• Pension provision for an agreed fee
• Agreed contributions, set by the Employer
• Contributions and investment choice can vary for different classes of employee
• No employer involvement in choice of an individual's investments
• Reduced employment costs
• Tailored pension solution in one scheme for all from CEO to junior staff
• Retention of financially aware staff
• No Trustee liabilities
• Possible NI savings (converting bonus into pension contributions)

For Employees

• Choice of how to pay their contributions – annual or monthly
• Can transfer in from other arrangements
• Portable fund if they change jobs
• Has control of death benefits (no need to provide spouse's benefits if single)
• Simplicity of structure
• Benefits of economy of scale
• Choice of investments

The importance of Platforms

The increasing use and availability of wraps and platforms has brought a new level of functionality which can greatly reduce the administrative burden for both the advisor and the SIPP Provider which in turn leads to a reduction in costs.

This translates into a very cost effective fee structure

In addition the use of platforms for CSIPP clients can greatly improve the service that can be given to members. Add to this the support of a dedicated SIPP administration team -
definitely NOT a call centre operation - and the MW CSIPP becomes a potent proposition.

It is also possible to set different investment structures for different levels of employee, or even for each employee if required.

We can also offer advisors a choice of wraps and platforms (if you want details see contact link below) as well as being prepared to discuss any platform we don't currently use.

What does it cost?

Less than you might imagine – it is typically less than a Stakeholder!

It depends how you set it up. However, fees largely depend on:

• Number of employees
• Range of investments required
• Services required(eg. Attendance at presentations)
• Number of transfers in from other arrangements

Our workload can be greatly reduced by preparation work by the employer and their advisers regarding scheme structure including:

• Eligibility of membership
• Categories of membership
• Investment structure
• Employer/employee contribution levels
• Assessment of members’ existing funds – protected rights
• Availability of discharge papers
• Availability of company money laundering paperwork

Fees will normally be charged for:

• Installation of scheme
• Annual management fee (annually in advance or monthly)
• Transferring benefits out
• At commencement of a pension benefit
• On taking benefits

Fees can be paid by the employer or from members’ funds. They are subject to VAT

Fees will be agreed in advance, once a scheme structure is finalised, and will be capped at an agreed level – the maximum fee payable once a certain fund value is achieved. (The maximum may be subject to increases in line with inflation)
This means that over time the relative cost of scheme administration will actually drop