What is a SIPP?

A SIPP, or self-invested personal pension, is a type of personal pension that gives you a much greater degree of freedom than any other pension. You’re in complete control of how and where your money is invested, and make the decisions that determine how your pension pot performs. The value of investments can change, of course, so remember that you could lose money as well as make it.

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're a higher-rate tax payer in the UK, you can claim even more tax relief. How you’re taxed depends on your circumstances, though, and pension and tax rules could change.

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.

If you like, you can transfer your existing pensions into a SIPP. But keep in mind some pensions may be better off left where they are – those which offer guaranteed pension payments, for example, or which charge steep fees to transfer out. If you’re not sure what to do, it’s a good idea to ask a suitably qualified financial adviser.

If you have a final salary (also known as ‘defined benefit’) pension, you must seek advice before transferring it. We can only accept a final salary pension worth £30,000 or more if a suitably qualified financial adviser has recommended that the transfer is right for you. To confirm you’ve received their recommendation, you and your adviser need to complete this declaration form.

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.

Your employer can also make contributions to your SIPP, either as regular or one off payments. Find out more about employer contributions.

Work for yourself? As well as making personal SIPP contributions, if you own your business you can make employer contributions too. Doing this can lower your business's corporation tax bill, as well as your personal income tax bill. Read more about pensions for the self-employed.

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 pricing calculator to estimate your charges.

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 information see options at retirement. You can also read our guide to drawdown.

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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For nearly twenty years, AJ Bell Youinvest has helped people invest in the life they want to live. We’re part of AJ Bell, one of the largest investment platforms in the UK, with £68.7 billion in assets under administration.

Our awards

We're a Which? Recommended Provider four years running – in 2019, 2020, 2021 and 2022. We are also proud to be named a Which? Recommended Provider for SIPPs for three years in a row – 2020, 2021 and 2022.

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