Enhanced pension opportunities for families - Family SIPP

Smith & Williamson launches Family SIPP

Family members can now pool their pension investments in a shared SIPP (self invested pension plan). This means they can access a wide range of investments - including commercial property - through their pension whilst also benefiting from tax relief of up to 40% on contributions.

"Families who combine their pension investments in a SIPP gain added flexibility as they can invest in assets way beyond the scope of an individual investor. What's more, as the pension is pooled, fund management costs are more competitive than might otherwise be available," explained Mike Fosberry, national head of financial services at Smith & Williamson, the investment management and financial services firm.

"Our Family SIPP can be used as a one-stop shop by family members who may already have a range of individual pension pots. They can put their various pension schemes together and so take advantage of their collective investment power."

"We also anticipate that families will be interested in using their SIPP to buy commercial premises from which the family might even run a business. Given that pension investment is highly tax efficient, this can be a very compelling opportunity," Mike continued.

In order to meet the demand for group SIPPs, which is in part fuelled by the rise in personal wealth, Smith & Williamson, has launched its Family SIPP.

For example, a husband and wife with three grown up children could set up a family SIPP which would give them scope to invest up to £8.25 million* with full tax relief. Brothers, sisters, minor children and more distant relatives could also join the scheme and increase the potential fund size.

Groups need a minimum of £200,000 to set up a family SIPP, with a minimum contribution of £3,000 per member.

Although Smith & Williamson's Family SIPP is aimed at family groups, it can also be used by, for example, firms of lawyers, dentists, barristers and the self employed generally.

In fact, these SIPP arrangements can be set up by any group of like-minded individuals with a common investment purpose and so use their pension pot to make investments not available to them individually or on an economic basis.

If commercial property is acquired, this can be let on an arm's length basis which could include the family business or partnership. Broadly, the SIPP can borrow up to 50% of the value of its assets. So, if the SIPP has assets of £500,000, its members could collectively borrow up to a further £250,000 so that £750,000 can then be  invested in, say, an office or shop.

*As at 2008/09, an individual's lifetime pension allowance is set at £1.65million.

For further information:

Mike Fosberry, Head of Financial Services at Smith & Williamson
Tel 020 7131 4250

PR enquiries to Kate Harrison / Alison Hayman 020 7131 4228 / 4138

Notes to editors

The opportunity for individuals who do not share the same employer to combine their pensions in this way has only been possible since the introduction of pension simplification in April 2006 (‘A' Day).

The post-A Day pension rules mean that individuals can get tax relief on pension contributions of up to 100% of their earnings in any tax year, up to a cap of £235,000 for 2008/09. This means high earners can build up their pension pot far more quickly than they could before ‘A' day.  Contributions can also be made on behalf of children or non-earning spouses up to a value of £3,600 pa.

Investment via Smith & Williamson's Family SIPP attracts all the usual tax benefits of pension contributions, ie for every £100 invested, the government puts in £40 for higher rate taxpayers and £20 for standard rate taxpayers.

Disclaimer

By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.

Note to editors

Smith & Williamson is an independent professional and financial services group employing over 1,500 people. The group is a leading provider of investment management, financial advisory and accountancy services to private clients, professional practices and mid-to-large corporates. The group operates from offices in London, Belfast, Birmingham, Bristol, Dublin, Glasgow, Guildford, Maidstone, Salisbury, Southampton and Worcester.

Smith & Williamson Limited

Regulated by the Institute of Chartered Accountants in England and Wales for a range of investment business activities. A member of Nexia International, a worldwide network of independent accounting firms.

Smith & Williamson Financial Services Limited

Authorised and regulated by the Financial Services Authority.