Self Invested Personal Pensions (SIPPs)

Almost any UK resident below the age of 75 can have a SIPP. You can open a SIPP for yourself or somebody else (like a partner or child).  

It is more a question of is a SIPP right for me? The answer differs depending on your individual circumstances.  

Before opening a SIPP, you should speak with a Chartered Financial Planner. 

You may not be able to do this, but you can use your SIPP to purchase commercial property which is associated with your business (such as your office). 

The answer is different for everyone, depending on income, pension pots elsewhere, standard of living, investments, etc.  

The important thing is to find out ‘Your Number’. A Chartered Financial Planner can help you do this. 

You can nominate someone to receive your SIPP if you pass away. This includes your spouse, children, grandchildren, and beneficiaries who are unrelated to you. You may also choose to leave some (or all) of your SIPP to charity. 

There are also certain tax rules about the inheritance of a SIPP which you should speak to a Chartered Financial Planner about. 

The number of holdings in your SIPP will depend on your experience and the size of your portfolio. There is no exact science.  

Speak with your Chartered Financial Planner first. 

There are several disadvantages or risks to using a SIPP. These include but are not limited to: 

• SIPPs are suitable for experienced investors with financial flexibility; if you do not have these things, a SIPP may be unsuitable for you. 
• There are no promised returns.  

These disadvantages are often associated with mis-selling of SIPPs. This is one of the many reasons why it can be beneficial to have the support of an experienced Chartered Financial Planner.  

There are no limits to the number of SIPPs you can have. But it is important to remember that there are currently limits to annual and lifetime contributions regarding tax efficiency in your pensions.  

They work in a similar way, but SIPPs can be more flexible and offer more control over investments than pensions.

The maximum annual allowance for SIPP contributions is £60,000 or 100% of your annual income up to that value.

Tax relief is one of the biggest benefits of a SIPP.  

You receive tax relief on your SIPP contributions where the government tops up any money you pay into your SIPP and other pensions by 20%. And higher and additional-rate taxpayers can also claim a further 20% and 25% respectively via self-assessment.  

Though this tax relief is limited by your annual earnings and the current pension annual allowance.  

In addition to this, investments in SIPPs grow tax-free from income tax and Capital Gains Tax.  

Yes. 

You are in control and can make changes and additions to your investments as often as you need.  

You can save a lump sum into your SIPP but will likely need to contact your pension provider to do this.  

Contacting your provider is something your financial planner can do for you.  

You can have both a SIPP and a workplace pension – and you can contribute to both at the same time.  

The use of both options may or may not be right for you depending on your personal circumstances.  

As with many other pension options, you can take a tax-free lump sum of up to 25%. You can then use the rest as taxable income. 

You may also take a number of lump sums.  

And, depending on what else you have drawn, the first 25% of each cash withdrawal will likely be tax-free.  

The fees you pay for your SIPP depend on the provider you choose, and the rate they charge for someone in your circumstances.