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A SIPP is a type of personal pension that gives you a far greater level of freedom about how you invest your retirement funds than you can get with any other pension. You are in complete control of how and where your money is invested - you make the decisions that will determine how your pension pot performs.
SIPPs offer the same great tax benefits as other pensions. For example for every £8,000 you contribute to your SIPP, the government pays in £2,000 and if you are a higher rate tax payer you can claim further tax relief.
Anyone under the age of 75 can pay into a SIPP- even if you are not earning you can contribute up to £2,880 net each tax year and receive tax relief. Parents are able to open a Junior SIPP for their children, although you must remember that the child will not be able to access their pension until they reach 55.
Once you reach 55 you can access your whole pension pot. You decide how and when to use the fund built up in your SIPP to provide you with an income. You can take up to 25% of your fund as a tax free lump sum and use the balance to provide you with a pension through income withdrawal from your SIPP or through the purchase of an annuity.
Before investing in a SIPP, you must understand that the money is going to be locked in until you reach at least 55 years of age.
So join today and start securing your financial future.
A key SIPP benefit is the tax relief that you get on your personal contributions. You can receive 20% tax relief on personal contributions up to the lower of your earnings and a maximum of £40,000 each year. This means that for every £80 you put in, the taxman will top this up to £100 with your tax rebate.
Higher rate taxpayers can claim extra tax relief through their self-assessment which is paid directly to them by the taxman. If you earn over £150,000 your annual allowance for pensions is tapered down from £40,000. Please read our taper relief guide for more information.
Non-earners can contribute to a SIPP too, this includes children. Parents can open a Junior SIPP for their children and contribute up to £3,600 each tax year.
Like any other pension, a SIPP allows you to take up to 25% of your fund at retirement as a tax-free lump sum. Your pension will grow free of capital gains tax and free of tax on income generated within the pension.
You can make both regular and one-off payments into your SIPP, and even putting a small amount away early will make a difference to how much you will eventually have to fund your retirement.
For example, if you start paying £200 a month into your SIPP at age 30, with a 5% growth rate each year your SIPP could be worth £163,000 by the time you reach 60. Starting at age 45 could result in a SIPP worth £53,000. Our regular investment service helps keep the costs low with dealing costs of just £1.50.
You can also transfer an existing pension or SIPP to us, there are no costs to transfer in or open our SIPP.
Our SIPP gives you access to a market-leading range of investments, including bonds, shares from 21 markets, around 4,000 funds, investment trusts, exchange traded funds (ETFs) and exchange traded commodities (ETCs). In fact, you would struggle to find such a wide range of investment options anywhere else.
One area you cannot invest in through the AJ Bell Youinvest SIPP is commercial property, and if you wanted to do this you could use the AJ Bell Platinum SIPP . This can be particularly useful for business owners who wish to hold premises within their pension fund.
If you are unsure if a SIPP is right for you please seek advice from a financial adviser first.
Anyone who is a UK resident or is a Crown employee or their spouse or civil partner who is working overseas and is under 75 can pay into a SIPP. You will be making your own investment decisions, so you need to be confident in what you are doing and prepared to do the research that goes with running your own pension scheme.
A SIPP is not right for everyone, but the freedom it offers you compared to a traditional pension can far outweigh the extra time taken to run your own pension.
You can also transfer money from another pension into a SIPP if you would like to, but there are some pensions that you might be better off leaving where they are, for example those where your pension benefits are guaranteed or where a big charge is deducted if you make a transfer. If you are unsure about your choices or you wish to transfer a defined benefit scheme to us, you must first seek advice from a financial adviser.
AJ Bell Youinvest does not offer investment advice, so you would need to be sure you are comfortable with managing your SIPP yourself before applying. There are a number of products that may be more suitable depending on your needs, including ISAs, or dealing accounts, and you should compare the benefits of our accounts to see which would be the best option.