Monday, November 21, 2005

The SIPP Myth Debunked - House Price Crash forum

The SIPP Myth Debunked - get full article
Bubble Pricker Oct 1 2005, 09:19 PM Post #1

"People keep posting and asking about SIPPs. We have chewed this topic over months ago at HPC, but as always, Joe Public only wakes up to the story belatedly and then rushes to jump on a bandwagon.

So very briefly, to debunk SIPPs once and for all, a very brief (and thus not accurate in all details summary):

1. A SIPP is a self-invested personal pension. These have existed for a long time. They are nothing other than personal pensions, which have also been around for a long time, in which the beneficiary can make his/her own investment decisions, rather than putting the money in (often poorly performing and high charging) unit trusts. There is nothing new about SIPPs. The only thing that is new from April 2006, is that most restrictions about the classes of assets in which SIPPs can invest will be lifted. Right now, SIPPs can only invest in shares, bonds and commercial property. From April 2006, they will be allowed to invest in just about anything, including residential property.

2. A SIPP fund, like any other pension fund, is a fund separate from the personal assets of a person. The SIPP funds are legally owned by a trustee for the benefit of the person whose pension the SIPP will eventually provide. The SIPP fund is therefore not legally owned by the beneficiary; this is very important, as we will see in a moment."

Check out the full article for a really clear explanation of SIPP's, why they are being hyped, and what the reality will be for house prices and the housing market.

Chris Bell

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