What is a SIPP?
When it comes to investing for retirement, more and more people are choosing a SIPP (Self Invested Personal Pension). Like any pension product, it isn’t an investment in itself, but a way of investing tax efficiently for your retirement. You could think of it as something that holds the underlying investments – a “wrapper” if you like – which is how it is often described.
Contributions into a SIPP attract significant tax benefits. These include the government adding another 20p into your pension for every 80p you pay in. Higher rate taxpayers may also be able to claim up to a further 20p via their tax return. Find out all the tax benefits of SIPPs
What are the advantages?
The other key advantages of a SIPP can be summed up in one word, "choice".
You choose what you want your money to be invested in. Instead of being restricted to a limited range of funds, as with many other types of pension, SIPPs offer a wide range of funds and assets.
You choose when to buy and sell investments.
You choose if you want to transfer in pension plans from other providers.
In other words, with a SIPP, you can focus on making the right investment decisions for you.
Who should have one?
Whether you're looking to start saving for your retirement or looking to top up existing pension arrangements, SIPPs can play an important role in planning for your retirement. Of course, if you already have a personal pension or company pension you may wish to speak to a financial adviser to see if you need to make additional provisions.
But the wide investment choice available and the flexible retirement options they provide may make SIPPs an ideal tool for pension planning.