What is a SIPP pension?
A SIPP pension (Self-Invested Personal Pension) is the name given to a type of UK government-approved personal pension scheme which allows individuals to make their own investment decisions from a range of investments approved by HMRC, these include: quoted UK and overseas stocks and shares, unlisted shares, collective investments, investment trusts and property and land insurance bonds.
A SIPP pension can prove particularly popular with people who don’t want a pension company deciding how their pension savings are invested; instead they want to control where their money goes and how it grows. There are also some very practical reasons for choosing a SIPP for your retirement savings or combining it with other pension types.
Are you suitable for a SIPP pension?
SIPPs are not ideal for everyone, but if you can answer yes to any of these questions apply to you it may be an option worth considering.
- Are you comfortable with your own investment decisions?
- Do you want a wider range of investments?
- Do you have a large pension pot or want to make a significant contribution?
- Do you have a financial adviser making decisions on your behalf?
- Is consolidating all of your pensions into one place important to you?
- Would you like to keep your investments after retirement to draw an income?
A SIPP can be one of the most tax-efficient ways of saving for retirement. Like all pensions, a SIPP offers up to 45% tax relief on contributions and there is no UK capital gains tax or UK income tax to pay. The tax benefits will of course depend on your individual circumstances and tax rules are subject to government changes.
Flexible and portable
SIPPs can also be very flexible, for example you could use a SIPP to raise a mortgage to part-fund the purchase of a rental property with the SIPP receiving the rental payments. SIPPs are also portable, if you change jobs, or stop working, you can continue contributing to the scheme, and, if you join a new employer, they may also decide to contribute to it although there is no obligation that they do so.
SIPPs can also be suitable for people who want to gather all of their pensions into one pot before they retire, or for those who want to keep their money invested after they retire so that they can draw down an income from it. The greater pension freedoms may persuade more people to opt for a SIPP pre-retirement in order that they can manage their own funds.
To find out more about SIPPs fill in the contact form and a SIPP adviser will call you back.