SIPPs celebrate 20th anniversary
2009 saw the SIPP celebrate its 20th birthday. Launched in 1989 by the then chancellor of the exchequer, Nigel Lawson, these self-invested personal pension plans were introduced to offer a tax efficient savings option. After somewhat underwhelming beginnings the popularity of the SIPP grew considerably to become the most sought after means of pension provision with an estimated £30 billion invested in SIPPs today.
The esteem which Britons hold for pensions and property goes hand in hand and the ability for commercial property to be held in a SIPP has made the vehicle even more attractive. A trend which central London based investment property experts, Experience International, recognises:
“Over the last 12 months a new trend has emerged within our client base for investment in domestic and international real estate through a SIPP. Approximately a sixth of all investment in 2009 was made via a SIPP with most clients unhappy with their current pension provision, unsure about traditional banking and seeking tax advantages”, comments Steven Worboys, Managing Director.
In accordance with SIPP eligibility guidelines only property designated for commercial use qualifies and requires approval from a FSA regulated SIPP provider adding additional security. Worboys continues:
“We are clear with our clients that in order for a property investment to be SIPP eligible it must be designated for commercial use only i.e. no personal use permitted. Many of our clients see the merit in this with one of our most popular projects being the Flaxby Golf & Country Club in Yorkshire which offers a 60% minimum income guaranteed over 10 years and Zurich Insurance Bond protecting the deposit.”
It’s not only UK SIPP eligible property which is attracting interest however with Experience International’s project in the Philippines performing well in 2009. Over 60 units in the South East Asian islands have been sold to date, 10% through SIPPs with investors looking to capitalise on the demand for quality accommodation generated by the boom in tourism to the region.
Over the past 20 years a wider variety of investment products have become SIPP eligible including responsible investments. As Steven Worboys explains:
“In addition to property, investors are increasingly seeking more responsible investments especially those with a green agenda. Our latest project, the Panama Paulownia Project which is a hardwood timber opportunity has been incredibly sought after with investors attracted to the sustainable aspects as well as the 26.5% annual returns on cash invested and SIPP eligibility.
“Moving forward we see potential in this market; we are currently in negotiations regarding an exciting new product involving solar panels supported by the German government with the benefit of a German bank providing gearing on the equity invested (it is not a collective investment scheme or fund).”
As we move in 2010 investors will now so more than ever seek security and trust with regards their investments with the SIPP vehicle gaining in popularity as a form of pension provision. Experience International are looking to expand their SIPP eligible product base and offer an attractive commission structure for IFAs and intermediaries with clients who wish to invest direct or via a SIPP.
For more information please contact Experience International on 0207 321 5858 or visit www.experience-international.com.