What is a Self Invested Personal Pension?

Staying safe on social media - man working using a mobile


Ken McGaughey

30th October 2017 at 9:26am

What is a Self Invested Personal Pension (SIPP)?

We all want a future to look forward to and saving into your pension is an important step.

There are lots of options when it comes to choosing one for your savings, whether it’s a workplace pension – 8.1 million of us in the UK have been automatically enrolled in one – or a personal one.

It all depends on your own choice and circumstances, of course. If you’re looking for a much wider range of investment choices, or have more complex finances, you might want to consider whether a Self Invested Personal Pension, or SIPP, might be right for you.

When you’re saving and when you’re retiring, you get more investment choice and more control with a SIPP.

While in many ways a SIPP is much like any other modern personal pension with its benefits of tax relief while you’re saving, it does have other things to offer.

It can complement your existing workplace savings, with all the benefits that it can offer.

Perhaps you’re simply looking for more options and want more control.

Interested in investing in a SIPP? Choose where you invest your money with the Standard Life SIPP.

A pension is an investment and you can get back less than you paid in.

Where can I invest in a SIPP?

At one end of the spectrum, there are SIPPs which only offer funds and certain individual investments, such as shares.

At the other end, some providers allow any of the investments which can sit within a SIPP, including commercial property.

Do check your SIPP provider offers you the investments you want as they don’t all offer the full range.

Consider the costs – and how you manage your investments

It’s true that you may pay higher charges if you choose more sophisticated investments.

You also need to consider carefully that, while you don’t need to be an investment professional to run your own SIPP, you do need to be able to take responsibility for any investment decisions you make.

It’s why many people who want a SIPP choose to speak to a financial adviser to look after their investments.

It might be something you want to consider, and there’s usually a cost for this.

Work out whether a SIPP is what you need

Pensions are a very tax-efficient way of saving and, as a modern flexible pension, a SIPP gives you all the income and death benefit options you’d expect, and a bit more.

Take your income when and how you want to, currently from the age of 55. You can leave your pension savings to anyone you nominate, either as a lump sum or for them to continue to hold as their own pension pot.

Those savings can even be passed on tax free if you die before 75.

Of course, tax rules can change and this does depend on your own circumstances.

But it’s that ‘bit more’ that you need to consider when considering whether you might want one.

When you’re saving and when you’re retiring, you get more investment choice and more control with a SIPP.

 If you’re considering a SIPP and whether it’s right for you, you might want to speak to a financial adviser. Find a financial adviser at unbiased.co.uk

A pension is an investment. As with any investment the value of your fund can go up or down and may be worth less than what was paid in. Tax and legislation may change and the information here is based in our understanding in October 2017.