A new type of self-invested personal pension scheme (Sipp) known as a ‘family Sipp’ or ‘master trust Sipp’ has emerged in recent years. It provides “very attractive benefits” for directors, business partners and high-net-worth families, says Jason Butler in The Schmidt Report.
The main difference between a family Sipp and a standard personal pension is that the former is “an individual trust-based Sipp, which allows multiple members under that trust”. These have several advantages. Because the scheme is established under its own single trust, members can pool their funds. That’s useful for “economies of scale, administration and investment opportunities”.
Members can also decide how investment growth is allocated, meaning growth can be directed from one member to another. This is useful “where one member would otherwise breach the lifetime allowance, but others are within the limit”. Family Sipps also allow members to swap their share of the pooled fund for a useful type of pension, known as a scheme pension. Contact Jason Butler, a chartered financial planner at Bloomsbury Financial Planning (jasonbutler@bloomsburyfp.co.uk), for more.