The Wealthy Divorcee by Hannah Foxley

Author:Hannah Foxley
Language: eng
Format: epub
ISBN: 9781909623095
Publisher: Panoma Press Ltd

Self-Invested Personal Pension (SIPP)

If your husband is investment savvy, he may well have a SIPP. This type of pension wrapper gives the investor the greatest flexibility. You can invest in practically anything, except residential property within a SIPP. Investments that are commonly found within a SIPP are individual company shares, portfolios that are managed by a discretionary fund manager (more on this later) or commercial property.

The advantages of a SIPP are that they offer great flexibility in terms of what can be invested within them and larger fund values are often invested in a SIPP so that a professional fund manager can manage them on a bespoke basis. They are also the wrapper that provides the greatest flexibility when it comes to choosing how you can take your retirement income.

When it comes to divorce, property held within the SIPP can cause a big problem. This can cause a real problem if you decide to split the pension. Firstly, the property will need to be valued to provide a value for the Form E. If the market is depressed at the time, this is likely to severely undervalue the true value of that investment. It also does not take into account the future value of the rental income that will build up in the fund and significantly increase its value in the future.

The next problem will be how to deal with the property within the SIPP. The property does not necessarily have to be sold, there is another way around it, but this would mean that you co-own the property in a pension fund of your own and it would not provide a clean break. It would also cause problems if one of you wanted to sell the property in the future.

The other problem that could be encountered is the investments that are held within a bespoke portfolio managed by a fund manager as they could have included investments that are not liquid and easy to disinvest (cash in).

This is why it is absolutely essential to have independent financial advice by a trained pension specialist adviser.

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