Gold now welcome in SIPP pension savings. Welcome since 2006 in fact…
Bullion.Directory precious metals analysis 10 June, 2016
By Adrian Ash
Head of Research at Bullion Vault
It means more choice and competition for savers wanting to benefit from that potentially juicy discount to the spot price, up to 45% for higher-rate tax payers.
That can only be a good thing. Because as our research shows, adding a little gold to your long-term savings has worked consistently, in the past, to reduce risk and smooth returns.
Contrary to some of the national papers’ breathless coverage of the Royal Mint’s news however, gold bullion in pensions is not quite as sparkly fresh as a newly-minted sovereign gold coin.
In fact, SIPP gold goes back to 2006, when government policy on alternative assets shifted suddenly.
After promising to extend SIPP-able assets to include real estate, unlisted shares, even race horses, the Labour government suddenly backtracked – no doubt because even Gordon Brown could do the maths to see how much money the pensions tax-relief on all those assets would cost the Exchequer.
To mask the U-turn, the Treasury hit upon 3 criteria that an asset had to meet to qualify. It had to be easily priced (ie, freely tradable), immovable, and non-wasting. Fair enough, but that threw out pretty much everything which financial advisors had started planning to include in their clients’ SIPP pension plans.
Yet none of these objections to these alternative assets applied to gold bullion – a fact of which BullionVault persuaded the legislators. Gold remained, as it has always been, a thoroughly credible investment.
As a result, investment grade gold bullion was included in the 2006 Finance Act as a special case. It’s been very special ever since, and as a long-time leader in the SIPP gold market, BullionVault has gone on to help hundreds of UK pensions savers to include physical gold in their SIPPs at very low cost.
As most savers understand, gold inversely reflects peaks and troughs in monetary confidence, which is why it is loaded into national currency reserves as a counter-balance to crisis. Back in 2006 the financial world was a happy, crisis-free place, so early adopters who perhaps smelled an ill wind tucked some gold away in their pension pots for as little as £315 per ounce.
Five eventful years later, as panic over the Euro peaked, the canniest traders were selling at over £1100 per ounce.
Since September 2011, when it felt like we were about three days from the implosion of the Euro, gold has settled back from its peak – going below £700 an ounce in July and then December 2015.
But now, once again, as the western world’s governments struggle to maintain control under the strain of record levels of sovereign debt – and just as the world economy swings to the downside – gold has started bubbling up again. Currently priced at £870 per ounce it’s showing a 24% rise in less than a year. If it’s doing its usual job as economic canary then something is definitely not quite right.
That appears to be what the legendary George Soros now thinks.
So how do you go about actually buying gold with that potentially juicy 45% discount for UK pension savers?
First you must open a Self-Invested Personal Pension (SIPP). Then the key is to make sure you don’t hand back all the profits in charges.
Generally speaking there are three charges to look out for:
- purchase premium and selling costs;
- bullion storage fees; and
- SIPP administration charges.
We can’t comment on the Royal Mint’s purchase or sale prices, but you can check live prices on BullionVault here, and pay as little as 0.05% to deal at them as explained here.
The Mint’s storage charge of 1.2% contrasts with BullionVault’s fee of 0.12% per year (with insurance included), subject to a monthly minimum of US$4 – currently around £2.75. Using BullionVault, you can also choose to hold your SIPP gold in London, New York, Singapore, Toronto or Zurich, all major dealing centres for physical bullion, where wholesale prices are tightest.
As for the SIPP administration charges you pay, that depends on which pension-product provider you use. You’ll find a short list of companies here, but there are others.
Some research and decisions are required, in short. But if you’re serious about balancing your pension savings’ risks with a little physical gold, that potential 45% discount is surely worth it.
Bullion.Directory or anyone involved with Bullion.Directory will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading in precious metals. Bullion.Directory advises you to always consult with a qualified and registered specialist advisor before investing in precious metals.
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