Posted on November 28th, 2014 | Categories - SIPPs
In her latest guest blog for Investment Sense, Gillian Bardin, Managing Director of Taylor Patterson looks at the case for holding Cash in a Self-Invested Personal Pension (SIPP) and explains how their unique Cash SIPP works.
Many people wish to hold their pension funds in a safe accessible vehicle as a temporary measure. This may allow time for them to find the correct commercial property to invest in or it may be a temporary home until sufficient assets can be built up to fund an acquisition.
During this period an individual may not want to take the risks of fluctuating values that other investments carry. Furthermore many financial advisers will not make investment recommendations into the market if the time horizon is less than three to five years. People close to retirement may also wish to collate all benefits together to allow for the payment of benefits.
A SIPP provides the ability to hold and invest into a wide choice of cash deposits, which typically are not available within standard insured contracts.
How can we help?
Taylor Patterson’s Cash SIPP offers potential members a cost effective way of holding simple deposit style accounts whatever the reasons may be.
It costs just £125 to set up the SIPP and the ongoing annual fee is also simply £125. The only additional fees would be a charge to complete new applications and cover due diligence on new accounts which is £50. An individual can access the funds via Income Drawdown or Flexible Drawdown subject to the usual Taylor Patterson Fees. It should be noted that all fees are subject to VAT.
With low interest rates on such accounts a competitive fee has become more important to ensure a reasonable return after charges.
Under the new provisions for capital adequacy Taylor Patterson will simply require some confirmation from the institution holding the deposit that any fixed terms can be broken, even if this involves a penalty. If this is not the case the asset will be classed as non-standard and it would not be cost effective for Taylor Patterson to hold such an asset in the Cash SIPP wrapper. It should be noted that as the regulation surrounding capital adequacy is new there is still some clarification required surrounding the practical application of the Financial Conduct Authority (FCA) rules.
Should in the future an individual wish to venture away from cash it is easy to convert to a SIPP that allows more varied investments. All the Taylor Patterson contracts are written under the same Taylor Patterson Master Trust. It is simply a difference in the way the products are charged.
If you would like to know more about the Cash SIPP or any of Taylor Patterson’s SIPP product range then please contact myself or Kerry Houghton firstname.lastname@example.org or 01772 550614.
Note: This article reflects the view of the author. It does not necessarily reflect the view of Investment Sense Limited. The article has been checked and approved to ensure that it is both accurate and not misleading. However, this is a blog and the reader should accept that by its very nature many of the points are subjective and opinions of the author.