Self invested personal pension (SIPP)

What is a self invested personal pension?
A self invested personal pension plan is similar in structure and enjoys the same tax advantages as a regular personal pension. However, it allows you far wider flexibility when it comes to investing your funds.

With a self invested personal pension, you can invest directly in a range of specialist assets including equities, gilts and commercial property.

Key points about self invested personal pensions

• Widest investment choice - in addition to the insurance funds available with personal pensions, you can invest directly in other assets such as investment trusts and Open Ended Investment Companies (OEICS)
• Borrowing ability - a self invested personal pension can borrow money to make commercial property purchases
• Tax reliefs- self invested personal pensions enjoy the same tax advantages as other personal pensions and stakeholder pensions
• Charges - charges for self invested personal pensions are generally higher than they are for other types of pension plan

Who is it for?

A self invested personal pension could be right for you if you are:

• looking for absolute control over the investments held in your pension fund
• Willing to invest time and experience to manage your pension fund assets, or can employ someone to do this
• Able to make significant pension contributions

Get specialist support
For advice on the type of asset you can put in your self invested personal pension, speak to our financial planning advisers.
0845 301 9945

• How it works

Anyone aged between 18 and 75 can have a self invested personal pension.

Starting your plan

• Decide how much you need to save - self invested personal pensions are better suited to larger contributions or transfers in from previous pension plans. You can save up to 100% of your earnings in a self invested personal pension - subject to a maximum of £245,000 (2009/10).
• Decide how your money is invested - this is where self invested personal pensions offer greater flexibility than conventional plans

Managing your pension fund
Self invested personal pensions are usually more actively managed than other personal pensions. This means that there are more investment decisions to be made.

If you have no experience of managing investments, you may have to appoint a fund manager or stockbroker to do this on your behalf.

When you retire
You can take your pension benefits whenever you want between age 50 (55 from April 2010) and 75. You can choose how your benefits are paid:

• Tax free lump sum - up to 25% of your pension fund can be taken this way
• Pension - you could opt for a level pension, one that increases every year or one that continues to be paid to your spouse or civil partner if you die. Your pension benefits will be taxed as income.

Get specialist support
For advice on the type of asset you can put in your self invested personal pension, speak to our financial planning advisers.
0845 301 9945

• Benefits of a self invested personal pension

A self invested personal pension is one of the most flexible, tax efficient ways of saving for your retirement.

Tax benefits

• You get tax relief on the contributions you make, the amount of tax relief depends on how much you earn
• Your contributions grow in a tax efficient fund. You can take up to 25% of your accumulated pension fund as a tax free lump sum

Investment benefits
You will have a wide choice of investment options which normally includes:

• Insurance funds
• Unit trusts
• Investment trusts
• Open Ended Investment Companies (OEICS)
• UK and overseas equities
• Gilts
• Commercial property

Many of these investments will have greater growth potential than the funds available to most conventional pensions, and a higher risk profile.

Other benefits

• Your employer can make a contribution, and your plan may be able to accept transfers from other pension schemes
• As you approach retirement, you move your savings into less volatile assets to preserve your gains

Get specialist support
For advice on the type of asset you can put in your self invested personal pension, speak to our financial planning advisers.
0845 301 9945

• Common questions about self invested personal pensions

How much can I pay into a self invested personal pension each year?
Can I transfer other pensions into a self invested personal pension?
How do I claim higher rate tax relief on my contributions?
When can I start taking my pension benefits?
What happens if I die before I retire?

How much can I pay into a self invested personal pension each year?
You can pay up to 100% of your earnings. Your employer can also pay into your personal pension.

The total amount paid in is subject to a limit (called the Annual Allowance) of £245,000 for the 2009/10 tax year. These maximum amounts cover all your pensions, so if you have a pension elsewhere it needs to be taken into account. If you don't have any earnings you can still contribute up to £3,600 and still get tax relief.

Can I transfer other pensions into a self invested personal pension?
Yes, most personal pensions will accept transfers from other personal pensions or company schemes.

How do I claim higher rate tax relief on my contributions?
You have to claim any higher rate tax relief through your annual self-assessment tax return. Your accountant or tax adviser can help you with this.

When can I start taking my pension benefits?
You can start taking your benefits from age 50 (55 from 6 April 2010). Under certain circumstances, if you cannot work due to ill health, you may be able to take your benefits earlier than this.

What happens if I die before I retire?
With most modern pension plans, the value of your pension fund will normally be returned to your dependants if you die before you retire.