What is a SIPP?
When it comes to saving for retirement, more and more people are choosing a Self Invested Personal Pension (SIPP). A SIPP isn’t an investment in itself, but provides a way of investing tax efficiently, helping you save for your retirement. You could think of it as something that holds your underlying investments – a “wrapper” if you like – which is how it is often described.
What are the advantages?
1. Tax efficiency
Contributions into a SIPP attract significant tax benefits. Most importantly, you
can claim tax relief on your contributions. This means if you are a basic rate taxpayer
the government will add another 20p into your pension for every 80p you pay in.
Your contribution allowance is £50,000. You will only receive tax relief up to a
maximum of 100% of your relevant UK earnings, if these are less than £50,000 per
year. If you are taking advantage of an additional carried forward allowance, tax
relief will also be claimed on these contributions up to a maximum of £50,000 per
contribution period.
If you pay tax at the higher or additional rate, you can continue to claim any additional
tax relief on the contributions made by you or by a third party on your behalf through
your self assessment return on contributions up to the stated limits. Any contributions
made to your J.P. Morgan SIPP after the age of 75 will not be entitled to any tax
relief.
Employer contributions are not eligible for tax relief.
Find out about the tax benefits of SIPPs
2. Greater choice
SIPPs allow you to choose where you want to invest your pension savings. Instead of being restricted to a limited range of funds, as with some other types of pension, SIPPs offer a wide range of funds and other assets to choose from, such as company shares and bonds.
You also choose how much you want to invest and how often. You can even transfer
in pension plans from other providers. With a SIPP you can focus on making the right
investment decisions for your future.
Find out about the choice available in the
J.P. Morgan SIPP
3. Better planning
A SIPP provides enhanced options at retirement that can give you greater flexibility.
As with other forms of pension, you can take a tax free lump sum when you retire,
while there are also a number of income options to choose from. With a SIPP, for
example, you can opt for Drawdown Pension if you don’t want to buy an annuity.
Find out more about your retirement
options with a SIPP
4. Opening a SIPP for a child
It’s never too early to start saving for a pension. You can open a SIPP for a child
under 18 and get tax relief to help their retirement fund grow for longer.
See more about opening a SIPP for
a child
Please remember that the value of investments and the income from them may fall as well as rise and you may not get back the full amount invested.
Suitability
You should, of course, only consider investments that are right for you. If you are in any doubt about the suitability of an investment, please speak to an independent financial adviser - find an IFA at unbiased.co.uk.
Related content
Employer contributions
J.P. Morgan SIPP at a glance
Why pensions matter
Please remember that the value of investments and the income from them can go down as well as up, and you may not get back the full amount invested. The tax benefits and liabilities will depend on individual circumstances and may change in the future.
Past performance is not a guide to the future.