A self-invested personal pension (SIPP) gives you the opportunity to invest in a wide range of assets.

It’s authorised in the same way as a standard personal pension and provides the same tax benefits, including 25% tax-free cash withdrawal. Tax reliefs are dependent upon personal circumstances, and pension and tax rules are subject to change by the government.

A SIPP allows you to invest in any qualifying pension asset (shares, stocks & shares, investment trusts, bonds, and property), and grants you independence from insurance companies with professionals managing the pension for a fixed fee. This could potentially help with reducing cost whilst increasing choice for you.

Features of a SIPP

  • Separates the administration of the pension scheme from the investments
  • Up to 45% tax relief, depending on your marginal tax rate (the income tax band you fall within), on personal contributions, while allowing contributions from your employer and other third parties
  • No income tax or capital gains tax on assets within the account as they grow
  • From age 55, 25% of the fund is available to you as a tax-free lump sum
  • Allows the purchase of land or commercial property from the scheme assets
  • Ability to access retirement benefits through a flexi-access drawdown, instead of purchasing an annuity.Ability to draw your pension benefits in phases (phased drawdown)
  • Upon death, offers tax-efficient options for beneficiaries
  • As an investor, you must be comfortable making your own investment decisions

Once funds are held in a pension they are not usually accessible before age 55, rising to 57 from 2028.

To learn more about whether a SIPP is right for you, how you can set one up and what will happen to your SIPP if you die, speak to an independent financial adviser who will be able to create a plan based on your personal circumstances.

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