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What is a SIPP?
Taking Control Of Your Pension
A Self Invested Personal Pension (SIPP) is simply a
special variety of personal pension which can be used
by most UK residents, even if they are not actually employed.
A SIPP is a wrapper, a pensions umbrella, under which you can shelter any of the normally permitted pension investments such as stocks and shares, unit trusts, investment trusts, bonds, cash, OEICS plus alternative investments such as commercial property and from April 2006 residential buy to let property via. specialist pooled investment funds.
You, the saver are in compete control and with the help of your financial advisor, you can decide what and when to buy and sell. The control and transparency appeals to many savers who have been disappointed by the returns from traditional opaque pensions provided by the large insurance companies.
Some of the unique benefits of a SIPP are:-
- The greatest flexibility when taking your retirement benefit. Maximum amount of control and flexibility over changing your pension.
- No compulsory investments
- A wide range of permitted investments including:
equities, mutual funds, bonds, gilts, insured funds,
OEICs, traded endowments, cash, ground rents, hedge
funds, private equity, direct investment in commercial
property and commercial property funds and also some
specialist residential funds.
Paying Less Tax
Pensions generally, and SIPPs in particular, are the
most tax efficient method of making provision for your
income in retirement. Contributions you make to a SIPP
qualify for tax relief at your highest rate. Currently
this means that if you pay tax at 40%, then for each £1000
invested in your SIPP you will only in effect be paying £600.
This means that the government is giving you back £400! All growth on investment inside your SIPP is free from Capital Gains Tax. This means that you receive the full benefit of any investment growth.
At retirement, up to 25% of the value of your SIPP can be paid to you as a lump sum totally free from income tax.
Contributions made to your SIPP by your employer qualify for Corporation Tax Relief.
In certain circumstances, should you die, the whole of the value of your SIPP can be paid out to your family or other dependents totally free from investment and Inheritance Tax. |
