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SIPPs explained

A Self-Invested Personal Pension lets you take an active part in investing your funds for your future

  • EQI explains

    Drawdown

    Learn about the different methods of drawdown: annuities, lump sums and FLUMPs

  • EQi explains

    Self-employed?

    Less than a third of the self-employed contribute to a pension; could a SIPP be right for you?

  • EQi explains

    Tax and SIPPs

    SIPPs share the significant tax benefits common to other private pensions

What is a SIPP?

Making sure you have a decent income when you retire takes planning. So, what do SIPPs offer?

A SIPP stands for Self-Invested Personal Pension. They enjoy generous tax benefits, give you access to a wide range of investments when compared to traditional pensions, and any gains made are free from capital gains and income tax.

Yet this pension option may not suit everyone. Why?

Because a SIPP puts you in the driving seat. A SIPP is a pension ‘wrapper’ which allows you to hold investments and decide what to buy and sell. The investment decisions you make are your own and, as with other investments, the value of your funds can fall as well as rise.

Since their launch in 1989, over 1.4 million people in the UK have opened a SIPP. If you want to take control of your private pension and actively invest, a SIPP could be a good fit.

  • Is a SIPP right for you?

    • If you are happy to be an active investor
    • If you are comfortable making investment decisions
    • If you want to invest in a wider range of assets, such as trusts or individual shares
  • Who can open a SIPP?

    • You can open an EQi SIPP if you are resident in the UK.
    • You can pay in up to 100% of your earnings, up to the maximum annual allowance of £60,000.
    • If you are not working, you can still contribute up to £3,600 a year including tax relief. In practical terms, that means you can put in up to £2,880 annually and the government would add a further £720.

Investment Risk Warning

The value of investments can fall as well as rise and any income from them is not guaranteed and you may get back less than you invested. Past performance is not a guide to future performance.

EQi does not provide investment advice. If you are in any doubt as to the risk or suitability of an investment or product you should seek advice from an independent financial adviser.

The extent and value of any SIPP tax advantages or benefits will vary according to the individual's circumstances. The levels and bases of taxation may also change. If your options change regarding an employer’s pension scheme you may wish to review your financial situation. Once in a pension your money is only accessible, in general, from age 55.

 

What types of pension are available?

At their most basic, pensions break down into state, company and private. Here’s a brief look at what they offer.

  • State pension

  • Employer pensions

  • Private pensions

Three reasons to consider a SIPP

  • REASON 1

    Tax

    SIPPs share the significant tax benefits common to other private pensions.

    The government automatically pays an extra 20% into your pension (the basic rate of tax). If you pay a higher rate of tax, you may be able to claim back up to 46% via a Self-Assessment tax return.

    • As a basic rate taxpayer, you invest £16,000
    • The government automatically adds £4,000
    • So, your SIPP will have a total investment of £20,000

    Plus, the money invested in your pension grows free of capital gains tax and income tax.

  • REASON 2

    Control

    Typically, investors have little or no choice in how their contributions are invested. A SIPP is different, as you are the manager of your own pension fund.

    A SIPP puts you in the driving seat, you decide which assets to buy, sell and hold.

  • REASON 3

    Choice

    A SIPP gives you access to a wider range of investment options, which means you can diversify your portfolio and seek returns which can boost your retirement pot.

    To help you select funds for your retirement pot which meet your investment goals and your attitude to risk, we’ve partnered with Square Mile, the independent investment research business.

Investment options: Pension v SIPP

*Some funds may be available in certain pensions

Investment Risk Warning

The value of investments can fall as well as rise and any income from them is not guaranteed and you may get back less than you invested. Past performance is not a guide to future performance.

EQi does not provide investment advice. If you are in any doubt as to the risk or suitability of an investment or product you should seek advice from an independent financial adviser.

The extent and value of any SIPP tax advantages or benefits will vary according to the individual's circumstances. The levels and bases of taxation may also change. If your options change regarding an employer’s pension scheme you may wish to review your financial situation. Once in a pension your money is only accessible, in general, from age 55.

SIPP FAQs

  • How much can I contribute into my SIPP?

  • Can I invest any unused allowance?

  • What if I earn more than £260,000 annually?

  • Can I invest after I retire?

  • How is the tax relief on my SIPP contributions reclaimed?

  • What happens to my SIPP fund should I die?

Insights

Investing styles: core and satellite investing for your ISA or SIPP

Insights
15.06.20

Grow your assets, get an income or preserve your capital?

Insights
10.07.19

Underestimating the cost of living in retirement

Insights
27.06.19

The pension pot puzzle - should you consolidate?

Insights
11.04.19

Retirement considerations for the self-employed

Insights
18.04.19

Is a SIPP right for your retirement?

Insights
18.10.18

How to make your retired years golden

Insights
12.07.18

Why you need to be sensible when planning for retirement

Insights
14.12.17

Expectations v reality: the gap facing retirees

07.01.21

A guide to combining your pensions in one place – and three pitfalls to watch out for

 

07.01.21

When to review your pension

  • Investing styles: core and satellite investing for your ISA or SIPP

    Insights
    15.06.20

    Grow your assets, get an income or preserve your capital?

    Insights
    10.07.19

    Underestimating the cost of living in retirement

  • Insights
    27.06.19

    The pension pot puzzle - should you consolidate?

    Insights
    11.04.19

    Retirement considerations for the self-employed

    Insights
    18.04.19

    Is a SIPP right for your retirement?

  • Insights
    18.10.18

    How to make your retired years golden

    Insights
    12.07.18

    Why you need to be sensible when planning for retirement

    Insights
    14.12.17

    Expectations v reality: the gap facing retirees

  • 07.01.21

    A guide to combining your pensions in one place – and three pitfalls to watch out for

     

    07.01.21

    When to review your pension