Pension Plans for Dentists

What is a pension?

Pensions are long-term investments with special tax rules – for example, you get tax relief on contributions.  You can't access the money in your pension until you reach age 50, going up to 55 by 2010.

Personal Pensions

A personal pension is one that you take out yourself, for example if you're self-employed.  They are a type of money purchase pension.

You choose the provider and make arrangements for your contributions to be paid. The provider claims tax relief at the basic rate and adds it to your fund. If you are a higher rate taxpayer, you will need to claim the additional rebate through your tax return. You also choose where you want your contributions to be invested from the range available from your provider.

Stakeholder Pensions

Stakeholder pensions are money purchase pensions and must have certain features. Some of these are:

• limited charges;
• low minimum contributions;
• flexible contributions;
• penalty-free transfers;
• a default investment fund – a fund your money will be invested in if you don't want to choose.

Self-invested personal pensions

The self-invested personal pension (SIPP) itself is a pension wrapper that holds investments until you retire and start to draw a pension income.  SIPPs are designed for people who want to manage their own fund by dealing with, and switching, their investments when they choose. They may have higher charges than other personal pensions or stakeholder pensions. For these reasons, they may be more suitable for large funds and for people who are experienced with investing.

With standard personal pension schemes, your investments are managed for you within the pooled fund you have chosen. SIPPs are a form of personal pension scheme that give you the freedom to choose and manage your own investments. Or you can employ and pay for an authorised investment manager to make the decisions for you.

A number of practitioners operate SIPPs that own their practice.  This can be advantageous in a number of ways and very tax efficient.  It is not suitable in all cases and should be considered along with all other options.

A typical range of investments in a SIPP could include the following:-

• UK and Overseas stocks and shares
• Unlisted shares
• Unit trusts
• Investment trusts
• Open ended investment companies
• Insurance company funds
• Deposit accounts
• Gilts and securities
• Commercial property
• Cash

If you would like further information about pension plans for pension plans for the dental profession or would like to arrange a free no obligation meeting, please give us a call on 01489 890111.

• The financial Services Authority does not regulate taxation and trust advice
• Levels and bases of and reliefs from taxation are subject to change and their value depends on the individual circumstances of the investor
• The value of your investment can go down as well as up and you may not get back the full amount invested