What Is A SIPP - SIPP Pension - SIPPS

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.

Why Choose a SIPP Over a Personal Pension?

Pensions were designed to help people save enough money for a comfortable retirement. However, most traditional pension schemes don’t allow people to choose where their money is invested. The main advantage of choosing a SIPP over a personal pension is that you will have the ability to choose how your money is invested. You can quickly check your SIPP online at any time and make changes to your pension and investments whenever you want. This will give you greater control over your pension pot and allow you to plan your retirement on your terms. That said, managing a SIPP can be more difficult and riskier, which is why we recommend a standard personal pension in more circumstances.

Taking Money from your SIPP

Traditionally, people could not typically gain access to their pension funds until they reached the age of retirement. However, new rules were introduced in April 2015 which gave people more flexibility over their pension funds. Under the new personal pension rules, you can start withdrawing money from your pension pot as soon as you reach the age of 55, even if you are still working. Please note that this is due to increase to 57 in 2028. In most cases, you can withdraw up to 25% of your SIPP tax-free, after which you will be charged regular income tax.

Start your SIPP with Prosperity Wealth

Choosing a SIPP can offer some advantages over a traditional pension scheme. However, understanding where and how to invest your money can be daunting, and the majority of individuals will want to choose a personal pension. With that in mind, SIPPs are typically more suited to people with experience in investing and most people are more suited to a personal pension scheme. If you do decide to choose a SIPP, then we’re here to help you get the most out of your SIPP and maximise your returns. Opening a SIPP is quick and easy with the help of one of our financial experts.

Contact us Today

Our specialist pension advisors have many years of experience helping people choose the best pension for their circumstances. We will take the time to get to know you and explain the various pension options to you in detail. All of our financial services are FCA-regulated, so you can have confidence that you will receive the best possible pension advice and customer service. We will help you make the right choices and start working towards your financial goals for retirement.