Self-Invested Personal Pensions (SIPPs)
SIPPs are a great option for people who want to take control of their pension. They have the flexibility to allow investors to choose how much to put in, when to put these amounts in and what to invest in. Some restrictions exist, of course, but SIPPs offer people much more choice throughout the life of the pension as well as some generous tax benefits. There are, however, reasons why they won’t suit everyone taking out a pension so we always take people’s circumstances and preferences into consideration before recommending them. We can also help people manage their SIPP once it is set up.
Major benefits of having a SIPP include the ability to choose what you invest in. Unlike other pension schemes, you can choose from a variety of assets such as stocks and shares, unit trusts, investment trusts and even property and land in some cases. You can then choose when and how much you would like to invest in the SIPP throughout its lifetime and the money is available to you once you turn 55. At that point, you can withdraw up to 25% of its total value as a lump sum tax-free and there are various options, such as taking out further lump sums or buying an annuity, with the rest. You can also continue paying into it after you with withdraw money until you are 75.
SIPPs also come with tax benefits such as a guaranteed 20% tax bonus and higher rate payers can receive an additional 25% deductible tax relief on their SIPP contributions but, as with all pensions, there are limits and SIPPs can come with higher fees than other pensions. The main reason SIPPs aren’t for everyone, however, is the fact that managing the investments yourself comes with greater risk than an established pension fund. All investments carry the risk that the value of the funds could fall and you end up with less than you invested but this risk can be higher with these types of pensions. When you take out and/or manage your SIPP with us, you do not need to go it alone as we will advise you based on our experience to help you make the most appropriate investment choices for your circumstances and your preferred level of risk.
Risk Warning: A pension is a long term investment. The fund value may fluctuate and can go down. Your eventual income may depend upon the size of the fund at retirement, future interest rates and tax legislation.
