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A rush to market for Mips, says wrap consultant Stan Kirk

Independent wrap consultant Stan Kirk is predicting a rush to market with new model maximum investment plans over the next few months.

Kirk says more advisers and wealth managers are now considering a Mip, a regular premium ten-year policy which pays out a tax-free lump sum at the end of the savings term, as an alternative tax wrapper for their clients.

He says: “Advisers and wealth mangers are now thinking that a fee-based and no contribution limit Mip with wrap-style fund choice could have significant advantages in an era when tax rates are creeping up, pension contributions for high earners are capped and Isa contributions are severely limited. I expect a rush to market with new model Mips over the next few months.”

Novia chief executive officer Bill Vasilieff agrees. He says: “Pensions have been walloped for the wealthy, the Isa limit is restricted and tax is going up so for those wealthy people an Mip could be a real option. The downside of course is you are tied in and you have got to keep your contributions up on a regular period for at least 10 years.”

But Threesixty partner David Ingram says there is already something similar in the market, a single premium bond.

He says: “If you have a Mip which has no contribution limits then you simply have a non-qualifying investment plan. I don’t see any reason why providers would rush to market with this Mip structure when a minor modification to their bonds would meet the demand which, by the way, I do agree will exist as a result of pension changes.”

Ingram also says bonds already exist as wrap friendly investments and the tax treatment of a non-qualifying Mip and a single premium bond are the same. He says the only possible advantage of the Mip route would be that it might be able to accept lower top-ups than are currently available with single premium bonds.


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There are 2 comments at the moment, we would love to hear your opinion too.

  1. New Model MIPS
    Have been retired since new Trust tax rules came in but I used to sell MIPS by the bucket load as investments within trusts because they were tax paid there was no further trustee Tax to pay and regular premium contracts are ideal for Gifts-out-of-income. Have been retired since new Trust tax.

    As to new model, the ones I sold had nil set up or termination charges , nil b/offer spread and amc down to 0.5% pa; how much better than that can you get ?

  2. MIPS
    Money Marketing is not helping with the education of advisers by printing comments from the likes of David Ingram who clearly has no idea what a MIP is nor how it is taxed. I sincerely hope he is not on their technical side because it would confirm to anyone that they are not a network to join.

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