October 2, 2005
SIPPs experts warn on risks and rewards
Norwich Union, an insurance giant, has raised its concern with the FSA on the marketing of the residential properties that is invested into a SIPP (self invested personal pensions) when the month of April rolls around as during this month, the law rules that this is possible.
The firm raised its concerns that the SIPPs might be telling people its added advantage, overemphasizing its benefits, but not its flaw. People from the SIPPs keep on saying that by purchasing personal property through a SIPP, customers can then effectively reduce the price of the property by as much as 40 percent because of the tax breaks. However, this is not entirely cleared. The adverts failed to disclose that there are possible substantial tax bill for investments in overseas properties or that the investor could not take hold of their property any longer.
According to Norwich Union’s head of pensions, Iain Oliver, they are much concerned with the marketing strategy of the SIPPs. “We highly believe that the marketing strategy of the SIPPs may be over simplistic for what is a very complex decision with implications of a very long-term contract. We believe that there should be a balance to everything – highlighting both the rewards and risks to ensure that people do understand the implications of investing in a residential property in a SIPP.”
On the other hand, according to Keith Boniface, SIPPs specialist, there is no good substitute for a professional advice and that they encourage every customer thinking of investing their property in a SIPP to seek any advice from anywhere and anyone. “There are lots of SIPPs friendly developments in Spain that can be purchased now for the completion in the next tax year and onwards, hading out extra equity growth for the pension.”
Alberto Linares of SIPPs in Spain, a grouping of 50 leading banks, leading developers, SIPPs providers and currency firm Travelex also said that they do share some of the concerns of the Norwich Union.
Posted on: Spain
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