What is a SIPP?

Self-Invested Personal Pension (SIPP)

Broadly speaking, a self-invested personal pension (SIPP) is a pension scheme that allows people to make their own investment decisions. A SIPP can offer a simple and flexible way to save for retirement, but it must be managed well. A SIPP is similar to a regular pension, although there are some significant differences that you should be aware of.

In most cases, a standard personal pension scheme is still the best option, although a SIPP can be a good alternative for some people. If you are considering a SIPP, then it’s vitally important that you do sufficient research and have a clear understanding of what will be involved. To help, we’ve put together this useful guide on everything you need to know about SIPPs.

The Basics of a SIPP

A SIPP is a pension scheme that holds investments until you retire and start to receive a pension income. As mentioned, there are similarities between a SIPP and a standard personal pension, but there are also some key differences. In particular, a SIPP is more flexible as you will have control over the type of investments you make. With a SIPP, you get to choose and manage your pension investments. A SIPP can be a good option for anyone who wants the freedom to manage and switch their investments when they want to. With a SIPP, you can choose to invest in a wide range of investment areas which may include:

  • Investment trusts
  • Commercial property
  • Stocks and shares
  • Unit trusts
  • Government securities
  • Offshore funds

Alternatively, you can hire an investment advisor to make investment decisions for you. We can help you choose the best SIPP and make the right investment decisions to ensure a comfortable retirement.

Tax Benefits of a SIPP

SIPPs enjoy the same tax benefits as other personal pensions. When you add money into your pension pot, the government pays an extra 20% in pension tax relief. So, if you deposit £8,000 into your SIPP, then the government will add £2,000 to make it £10,000. This is designed to help you build your pension funds quicker and enjoy a comfortable and secure retirement. Once you have transferred money into your SIPP, it is no longer subject to UK capital gains or UK income tax. Keep in mind that the tax benefits of a SIPP will vary depending on your individual circumstances. If you are a higher rate taxpayer then you will receive a further 20% tax relief of £2,000. Contact our specialist financial advisors for advice on the most recent tax rules.


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