Self Invested Personal Pension (SIPP)
A Self Invested Personal Pension (SIPP) is a Registered Pension scheme under the terms of the Finance Act 2004.
SIPPs are designed for investors who want maximum control over their pension without being dependent on any one fund manager or insurance company. As such, a SIPP requires active management and a degree of investment expertise. Furthermore, the charges (levied by the SIPP manager) may be higher than for a personal pension or stakeholder plan.
The value of pensions and the income they produce can fall as well as rise. You may get back less than you invested. Tax treatment varies according to individual circumstances and is subject to change.
Alex was very helpful throughout the whole process of applying for my mortgage. Due to my complex circumstances, Alex was able to source a joint borrower, sole proprietor mortgage which meant I could achieve my objectives with the help of a family member. Alex was kind, patient and understood my needs. As a person who suffers with a long-term disability, Alex made sure that he catered for my needs by ensuring that all appointments took place in a downstairs office.
What is a SIPP?
Unlike a standard personal pension, a SIPP holder has a much wider choice of assets to invest in, each of which can be selected to meet the individual’s personal circumstances and requirements.
- Investments which can be held in a SIPP include:
- UK and overseas equities
- Unlisted shares
- OEICs and unit trusts
- Property and land (but not most residential property) insurance bonds
It’s possible to use a SIPP to raise a mortgage to fund the purchase of commercial property, where the rental income paid into the SIPP either completely, or partially, covers the mortgage repayments and/or the property’s running costs.
Please note SIPPs are not suitable for everyone investing into a pension, we will conduct an assessment of your situation to determine suitability.
Frequently asked questions
- What is the minimum age to set up this type of plan?
The minimum age for setting this up is 18 years old.
- What is the maximum I can contribute?
The annual allowance is the maximum you can pay into pension each year. It is the minimum of your relevant earnings or £60,000 (2023/24). If you have no earnings or relevant earnings below £3,600 gross, then the maximum you can pay into pension is £3,600 gross.
- When can I access my pension?
Currently you can access your pension from age 55. This will be changing in April 2028 to 57, 10 years before state pension age.
- What happens if I die?
If you die before age 75 and you have not started to take benefits from your pension the funds will normally be passed to your spouse or other elected beneficiary free of inheritance tax. Other tax charges may apply depending on the circumstances.
It is possible to continue past age 75 without taking benefits. If you die after age 75 your pension pot can still be passed to a nominated beneficiary free of inheritance tax, however if paid as a lump sum, tax at the beneficiary’s marginal rate will apply (2023/24). If it is paid as an income to your spouse or dependant there will be no initial tax charge, but any income paid would be subject to income tax.
- Is there a large fund availability?
SIPPs have a vast availability of funds and assets. They can be quite complex in nature but can be a useful tool for those with complex needs.
