Group SIPPs

What is a group Self Invested Personal Pension (SIPP)? What are its pros and cons? When might it be best for you? In this article, you’ll learn all of this and more.

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What is a Group SIPP pension?

It’s a type of SIPP in which a number of individual SIPPs are ‘grouped’ together. A common example is known as a ‘workplace SIPP’, which is a group SIPP held by a collective of people who work at the same company.

Although the SIPP is held as part of a group, each member of the scheme is free to manage their own scheme.

Like with regular SIPPs, group SIPPs act as a ‘wrapper’ that can be used to invest in a variety of different asset classes. But, unlike a personal SIPP, it also allows for contributions and payroll deductions from your employer.


What are the pros and cons?

As you can imagine, the complexity and specialised nature of a group SIPP means that it’s not for every investor group.

Take a look at some of the pros and cons below.

The Pros

Tax relief

Group SIPPs are the only kind of investment vehicle with this kind of choice that also allows you to claim tax relief.

And, if your group SIPP is for your workplace, your employer can also pay in. If they do, their contributions also incur tax relief.

A wider range of investment choices

SIPPs were designed for the hands-on investor. They offer a range of investments (such as commercial property) that cannot be accessed by other forms of group personal pension.

Economies of scale, group purchasing power and greater access

Pooling funds allows individuals in a Group SIPP to increase their purchasing power, and access investments that are not usually available with smaller pension pots – such as commercial property.

The Cons

Group management

Though every member is free to manage their own pension, there needs to be some alignment in overall strategy, as this will help to determine the kind of investments that the fund makes.

Complexity

SIPPs are designed for experienced, hands-on investors. If you’re not willing to put in the work to research and administer your SIPP, it may not be right for you.

Fees

In some (but not all) instances, you can incur more fees through a SIPP, especially if your group trades a lot or uses funds with many options and features.

This is why it’s important to be sure what your investment strategy entails (and doesn’t entail) – so that you don’t end up overpaying. Get in touch with one of the expert advisors we work with if you’d like a little help with this.

Age limits on withdrawals

Unlike the majority of other investment vehicles, you’ll have to wait until you’re 55 before you can even begin to withdraw from your Group SIPP.

Can a group SIPP purchase property?

Yes, and it’s relatively straightforward.

In such a transaction, the fund buys the property, instead of each individual person in the SIPP having to buy their own share.

There is a caveat, however. Group SIPPs can be used to buy commercial property, but direct investment in residential property is currently not allowed.

That said, a group SIPP can hold property ‘indirectly’ through an investment vehicle such as a Real Estate Investment Trust (REIT), though not all SIPP providers will offer this.


Who are the best group SIPP providers for me?

The best way to find out is to get in touch with one of the pension experts that we work with. They can take a look at your group’s needs and circumstances to find the absolute best provider for you.

As a rule of thumb, you want to look for a provider that provides access to all of the investments that your investment strategy calls for – whilst charging as little as possible in dealing and management charges.


Talk to an expert today

If you have questions about group SIPPs and want to speak to an expert for the right advice, call us today on 0808 189 0463 or make an enquiry.

Then sit back and let us do all the hard work in finding the pensions expert with the right expertise for your circumstances. We don’t charge a fee and there’s absolutely no obligation or marks on your credit rating.

We can arrange a free pension review for you today

70% of customers who have a pension review find a better deal

We can arrange a free pension review for you today

70% of customers who have a pension review find a better deal

Author:
Tony has worked in a vastly diverse array of areas in the pensions industry for over 2 decades. Tony regularly writes for trade press, usually on topical and pensions pieces as well as acting as a judge at prestigious national events. Tony is also a highly qualified Independent Financial Adviser in his own right. His mantra has always been "Hope for the best, but PLAN for the worst", and believes that the biggest impact that an adviser can have on a client's life journey is to take them on a journey from generally having little or no real idea of what their retirement will look like, to giving them the understanding of what their retirement looks like now, then helping them navigate a path to what they WANT their retirement to be.

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