Capital Treasury Services. SIPP Solutions The Cash Option

Transcription

1 Capital Treasury Services SIPP Solutions The Cash Option

2 Self-Invested Personal Pension This is the name given to the type of UK Government approved personal pension scheme, which allows individuals to make their own investment decisions from a range of approved HM Revenue & Customs (HMRC) assets and investments. In the past the pension options available to individuals were often limited to either a company scheme, if their employer offered one, or a personal pension which, at retirement, had to be used to purchase an annuity at whatever rate was available at the time. SIPPs, in common with personal pension schemes, are tax wrappers, allowing tax rebates on contributions in exchange for limits on accessibility. The HMRC rules allow for a greater range of investment types to be held in a SIPP than personal pension plans, notably equities and property. Rules for contributions, benefi t withdrawal etc are the same as for other personal pension schemes. More recently the SIPP has become available which allows clients to invest their personal pension in a wide range of investments and provides more fl exibility than the traditional personal pension regarding when and how you take the benefits. A SIPP allows clients to save in a tax effi cient way for their retirement, and provides them with the opportunity to choose from the best funds to get the best value for your money.

3 Starting Out ASIPP can be started by an individual or by an employer. With Capital Treasury Services we can help start up a SIPP with any approved regulated provider investing into our Cash Option. Depending on the type of provider (these include insurance companies, pension consultants and fund managers, amongst others), the plan will involve at least a scheme provider and a scheme administrator (which may be the same organisation). If the SIPP is to be trust-based, and you are not going to be the trustee, then the provider or another specialist must act as trustee. A SIPP can be started from scratch or by transferring funds from another plan. Innovation Integrity Excellence

4 Tax Treatment 1 Contributions to SIPPs are treated identically to contributions to personal pensions. Individual contribution will receive automatic basic-rate tax-relief; higher-rate taxpayers may be able to claim additional relief through their tax returns. Employer contributions are allowable against corporation or income tax. Income generated from the assets within the scheme is untaxed. Growth is free from capital gains tax. Pension income provided either from an annuity or via income withdrawal is taxed as earned income at the members highest marginal rate. 1 Capital Treasury Services Limited does not provide tax advice and recommends that you should always seek professional advice in these matters - if you do not have an adviser we can provide you with a list of approved companies.

5 SIPP Suitability ASIPP may be suitable if you are self-employed, your employer does not have a pension scheme or if you have a number of pension plans which you would like to transfer into a single plan. SIPPs are particularly suitable for you if you want: to have more fl exibility over the purchase of annuities as you are due to retire in the near future to take more control over investments you make within your pension the freedom to invest in a wide range of investment funds through your pension to transfer a number of pensions into one single plan fl exibility over when and how much pension income you take, subject to Tax Assessor approval greater choice over the pension benefi ts available to your dependant(s) when you die to keep pension benefits within your estate for your family

6 Investment Choices Investors may make choices about what assets are bought, leased or sold, and decide when those assets are acquired or disposed of subject to the agreement of the SIPP trustees. The range of assets permitted by HMRC include: Stocks and shares listed on a recognised exchange Authorised UK Unit Trusts and OEICs & other UCITS Funds Investment trusts subject to FSA regulation Commercial property (inc. hotel rooms) Traded endowments policies Deposits and deposit interest This list is not exhaustive and different SIPP providers will offer different ranges of investment choices. Deposits and deposit interest specifi cally relates to the services 1 offered by Capital Treasury Services: Capital Liquidity Account Cash Management Foreign Exchange Money Market Investments Platinum Bond Fixed Term Investments 1 Please contact us for further information on the services provided by Capital Treasury Services Limited that can reside within a SIPP. Structure Unlike conventional personal pensions where the provider as trustee has ownership and control of the assets, in a SIPP the member may have ownership of the assets as long as the scheme administrator is a co-trustee to exercise control. In practice, most SIPPs do not work this way and simply have the provider as SIPP trustee. The role of the scheme administrator in this situation is to control what is happening and to ensure that the requirements for tax approval continue to be met. CTS will work closely with the SIPP provider and scheme administrator to ensure that the SIPP Solutions Cash Option meets their reporting requirements.

7 The Cash Option While SIPPs can give you access to exotic commercial property, you are always free to keep your wealth in its simplest form: cash. SIPPs can invest into this asset class much like a traditional investment portfolio, allowing you to keep funds earning a rate of return while you wait for a suitable investment opportunity. However, with interest rates at record lows, you're never going to get rich in cash. It's a new paradigm for SIPPs especially with deposit rates having shrunk, often below local base rates. Another important issue relating to cash is whether your money is protected; after the global banking crisis it is so important to bear this in mind if you are holding large amounts of cash in your SIPP. Treasury Management Cash is an asset class in itself and like other assets, should be proactively managed, now more than ever. T his is why we believe a dedicated service tailored to meet clients specifi c cash management needs is required. We work closely with clients to best blend those identifi ed needs against market availability. We actively seek innovative approaches to meet investment needs using our global network of connections to open doors to the right investment opportunities. Capital Liquidity Account One of the core investment services within CTS is the Capital Liquidity Account; a unique hybrid cash management solution which tracks the UK, US Federal Reserve and European Central Bank Rates, ensuring client money is always earning a market leading rate. Not only does the CLA offer pro-active liquidity management with stable, consistent returns but it is a safer alternative, having been awarded for the third year running the AAAf / S1+ rating by Standard & Poor s. Foreign Exchange Foreign Exchange is a part of the Capital Treasury Services Limited core service offering; with lines into institutional market makers and liquidity providers; both in the Isle of Man and London. We transact foreign exchange deals on behalf of other fi nancial institutions as well as large corporate entities that range from small Island-based corporate service providers to listed FTSE100 companies. They come to us because we are able to provide them with more competitive pricing structures than they receive from their existing banking relationships and other treasury service providers.

8 What are the income choices? Benefi ts can be taken in stages into your Capital Treasury Services Account, as required, or by leaving the remainder of the assets invested. The main option for taking benefi ts is: Income Drawdown This is when you draw an income, within the limits agreed by the HMRC 1 - for instance up to 25% of the fund can be taken as a tax-free lump sum and the rest taken as regular income. However, if you take a high level of income early in the term of the plan, this may reduce the income available for you and your dependants at a later date. With some SIPPs you may be able to take income drawdown either as: Full Drawdown You can take all of your tax-free lump sum and any income from your plan have it paid directly into your CTS Account; or Phased Drawdown You can take a portion of your total tax-free lump sum and an income, plus you can buy an annuity from different parts of your SIPP at different times; with the lump sum and income being paid directly into your account with Capital Treasury Services. You can use phased drawdown to: ease back gradually on work by starting to replace earned income with pension income. provide more fl exible death benefi ts, because parts of your plan that you haven t used to buy pensions can be used to provide an income, a pension or a lump sum for your spouse and dependants. 1 Capital Treasury Services Limited does not provide tax advice and recommends that you should always seek professional advice in these matters - if you do not have an adviser we can provide you with a list of approved companies.

9 Annuity Annuities determine the level of annual income clients will be able to receive and can be bought from an authorised pension provider. Annuity rates are fi xed at the time of purchase and will pay a guaranteed regular income for the rest of a clients life. Please note, annuity rates can change signifi cantly, both up and down, over time. This means that if you decide to defer buying an annuity, and make income withdrawals instead, the annuity rates at the time you actually buy the annuity may be lower than if you had bought an annuity immediately, resulting in a lower annuity income. The Cash Option Once again The Cash Option can be used to keep your income and tax free lump sum working for you outside of the SIPP. R egardless of whether a SIPP was originally managed by Capital Treasury Services, they can construct a portfolio of cash-based assets with the drawdown proceeds from the SIPP in line with a clients risk and investment profi le.

10 Investor Protection Neither Capital Treasury Services or other members of the Capital International Group are banks and do not offer banking services - so unlike a bank account investors with CTS are not lending money to us or the Group and as a result their money is not exposed to the Company s or Group s balance sheets or underlying business in any way and should they cease to operate for whatever reason, then client monies will remain fully protected. Monies are invested into client segregated accounts within a ring-fenced nominee custody account. No investments or transactions are made on your account (other than transfers instructed by you and interest paid by Capital Treasury Services or the Capital International Group of companies) and hence SIPPs are not subject to any specifi c investment, market or transactional risk. As a result, monies invested into a SIPP enjoy a very high level of security.

11 Innovation Integrity Excellence Web Portal This is the hub for all of our products and services; allowing you to have all the information at your fi ngertips when you need it, from simple product information to product statements and valuations. Our web portal is updated regularly with money market updates, fi nancial news and product performance fact sheets. For all our business introducers, intermediaries and clients the web portal provides an on-line reporting service which offers daily asset pricing (where appropriate) and includes accrued interest amounts with the additional functionality of being able to show portfolio and asset transaction histories. Further Information For more information you can go on-line to our web portal at or alternatively contact us at the details below: Telephone: +44 (0) In writing: Capital Treasury Services Limited Capital House Circular Road Douglas Isle of Man IM1 1AG This document has been prepared for information purposes only and does not constitute an offer or an invitation, by or on behalf of Capital Treasury Services Limited, to buy or sell any security. Nor does it form a constituent part of any contract that may be entered into between us. This document is deemed to have been delivered in the Isle of Man. Capital Treasury Services Limited makes no representation that the material contained is appropriate or available for use in locations outside the Isle of Man and is not soliciting business from any location outside the Isle of Man. The information contained herein is believed to be correct, but its accuracy cannot be guaranteed. Any reference to past performance is not necessarily a guide to future performance. Opinions constitute our judgement at the date of writing and are subject to change. Capital Treasury Services Limited is licensed by the Isle of Man Financial Supervision Commission.

12 Registered Offi ce: Capital House Circular Road Douglas Isle of Man IM1 1AG Telephone: +44 (0) Facsimile: +44 (0) Capital Treasury Services Limited is a Member of the Capital International Group Capital Treasury Services Limited is licensed by the Isle of Man Financial Supervision Commission CTS SIPP Brochure - V