What is a SIPP?

A SIPP or self invested personal pension 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.

What are the SIPP tax benefits?

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 in the UK, 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.  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.

What can I invest in?

Our SIPP gives you access to a market-leading range of investments, including bonds, shares from 21 markets, around 2,000 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.

Who can open a SIPP?

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 open and 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.

You can also transfer an existing 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.

How do I pay into a SIPP?

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. 

What are the charges?

Our award-winning SIPP has no set-up fees or charges to transfer a SIPP to us. You can deal online from just £1.50 for funds and £9.95 for shares. See our SIPP charges and rates for full details and use our charges comparison calculator to compare our charges to the largest platform providers.

How do I access my SIPP?

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. You can also take a series of lump sums from your SIPP – it’s flexible. For more on your options at retirement see accessing your pension.

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. So open a SIPP today and start securing your financial future. 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.

For more information please read the key features and terms and conditions of our SIPP.

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FREE guide to SIPPs

We explain how SIPPs can help you achieve your retirement goals

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