Investments
What can the HD SIPP invest in?
The choice of investment opportunities is wide and can be made in a variety of areas.
Investments held by Registered pension funds are regulated by HM Revenue & Customs, and a list of permitted investments is given below.
Regulations actually permit a pension scheme to make any investment, but the forbidden ones listed below incur very onerous tax penalties which make them unviable.
The SIPP is highly flexible in the choice of investment structure for the fund, and the investor can choose their degree of involvement in managing the fund.
Of course, the investment management of a fund may be left entirely to the appointed manager, on a discretionary basis without reference to the investor, if this suits their circumstances better.
The HD SIPP also permits transactions (i.e. purchases from, sales to or leases to) scheme members or members of their family, subject to proof that the transaction is carried out at open market value.
Please note HD Administrators LLP is not able to offer pensions or investment advice.
Approved investments
- Stock Exchange listed companies
- AIM and OFEX Companies
- Deposits
- Unit trusts and OEICs
- Government Securities
- Quoted Debentures, loan stocks
- Traded futures and options (relating to stocks and shares on a recognised futures exchange).
- Companies quoted on a recognised overseas stock exchange
- Building Society permanent interest bearing shares (PIBS)
- Second hand endowment policies
- Insurance company managed funds and unit linked funds
- Hedge Funds
- Contracts for Difference
- Direct property purchase (including commercial property, agricultural land, one-off property development (not trading), hotels, nursing homes & public houses both in the UK and abroad). Although HD Trustees Ltd have taken the decision not to offer direct property purchase under the HD SIPP
- Shares in unquoted private companies Offshore funds Ground Rents Real Estate Investment Trusts (REITs) Pooled investment vehicles and syndicates where the member cannot influence or control the investment (known as “Genuinely Diverse Commercial Vehicles”)
- Intellectual Property
Notes:
Some approved investments are regarded as Borrowing up to 50% of the pension fund’s net value can be taken to finance any of the above investments. This must be from a commercial lending source on commercial terms.
Pooled Investment Vehicles such as Unit Trusts, OEICs, Managed Funds, and Genuinely Diverse Commercial Vehicles are permitted to invest in residential property and “tangible moveable property” (i.e. art, stamps, fine wines, classic cars etc) provided they do not permit pension scheme members to influence or control the investment strategy - normally defined as having more than a 10% interest in the fund. There are additional criteria for these vehicles and they should be referred to HD Administrators LLP for prior approval.
Forbidden investments
- Direct investment in residential property
- Direct investment in tangible moveable property (art, antiques etc)
- Commodities
- Wasting assets (defined as having an expected of that company or fund. For example, the SIPP life span of 50 years or less)
- Premium bonds
- Investment grade Gold bullion
- Indirect investment in residential property and tangible moveable property i.e. where the pension scheme purchases shares, units etc in a company or fund which enables the member to control or influence the investment strategy purchases 50% of the shareholding in a company Limited liability partnerships which invests in residential property.
