Self-invested Personal Pension (SIPP)
Self-invested Personal Pension Pension (SIPP)
Self-invested personal pension (SIPP) is a type of tax-efficient personal pension usually offers a wider range of investment choices than other types of pensions, putting you in control of how you invest your pension pot.
Unlike a standard personal pension, a SIPP holder has a much wider choice of assets to invest in, each of which can be selected to meet the individual’s personal circumstances and requirements.
What can I invest in a SIPP ?
- UK Stock and Shares
- International shares
- Unlisted shares
- Unit trusts
- Open-ended investment companies (OEICs)
- Investment trusts
- Commercial Property
- Exchange-traded funds (ETF)
- Real estate investment trusts (REITs)
- Gilts and bond.
Please note that the above list of investments is not exhaustive. If you wish to discuss whether a particular investment is acceptable or not, please do contact us.
Can I Transfer a Pension in to a SIPP ?
In most cases, you can. However, it depends on the type of pension and features. Combining pensions can greatly simplify both maintaining them and monitoring the overall performance of the pension pot. But it’s worth taking some time to think about whether it’s the best option for you as transferring isn’t always right for everyone.
Advantages of SIPPs
SIPPs offer flexible approach and greater control over your retirement savings than a standard pension. Main advantages of a SIPP:
- You can make lump sum or regular contribution.
- Basic rate tax payer will receive 20% tax relief on your eligible contributions.
- If you are a higher rate taxpayer, you can claim further tax relief (at your higher rate) from HMRC. This is usually claim through your self-assessment tax return. The rates are slightly different in Scotland.
- You can take a pension commencement lump sum of up to 25% of the value of your pension savings, which is completely Tax free (upto a maximum of £268,275) from the age 55, this is set to change to 57 on 6 April 2028.
- You can bring several pensions together into one SIPP
- You can start taking an income or lump sums (or both) from the age of 55, this is set to change to 57 on 6 April 2028
- There is no minimum age restriction for opening a SIPP account.
- You can carry on making contributions to a SIPP until you are 75
- It provides flexible retirement income options.
- It can be a way to pass on some of your wealth inheritance tax free.
Disadvantages of SIPPs
SIPPs may not be for everyone and involves some risk. Some main disadvantages are
- You can only access money from your SIPP aged 55 (57 from 6 April 2028) or older.
- There are limits on tax relief, as with all pensions- contribution up to a £60,000 per tax year.
- SIPPs can have higher charges than other personal pensions.
- Having complete control over investments in your pension leaves open the possibility you will make trading mistakes that affect the eventual value of your pension.
The value of pensions and investments and the income they produce can fall as well as rise. You may get back less than you invested.
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