Cookie Policy

Close Policy Banner

We use cookies on our website and have placed these on your computer. By continuing to use our website you consent to this. For more information, including how to change your cookie settings and to disable our non-essential Google Analytics cookies, please refer to our Cookie Policy. If you do not wish to be reminded of this on each visit, please use the close button.

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
- FIND OUT MORE
EQi explains

Self-employed?

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

Tax and SIPPs

SIPPs share the significant tax benefits common to other private pensions
- FIND OUT MORE

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 1.7 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
Before opening an account, please read our Terms and Conditions

Important Information

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.
- Open your SIPP

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

The government state pension has been subject to several reforms since 2010 and when you were born now impacts on whether you receive the old basic or new state pension.

You can find full details of which you qualify for here.

The good news is that a state pension is paid out weekly for the rest of your life and, currently, it rises each year. The downside is that at less than £11,000 a year, it will be difficult to live well on the state pension alone.

Employer pensions

What pension schemes companies offer will differ and what employees will receive when they retire will vary widely. Broadly they can be broken down into defined benefit or defined contribution schemes.

Defined benefit

Defined benefit pension schemes provide retirement benefits that are based on your earnings and the length of time that you have been a member of the scheme. These give you a guaranteed annual income but are not generally offered to new employees and are becoming a thing of the past.

Defined contribution

Most common these days are defined contribution pension schemes, where contributions made by you and/ or your employer are invested in a range of different investments. You may be offered a choice about how your contributions are invested. The benefits that you receive at retirement depend on:

How much has been paid in on your behalf (by you and/ or your employer)
The length of time that it has been invested
How the investments have performed over this period.

Over the years, it is not uncommon to find that you acquire a number of pension pots if you move employer.

You can look to combine your pensions into one pot, which can reduce the fees you would otherwise pay. It is worth checking that you will not lose benefits if you move a pension or incur transfer fees.

Read more about what The Pension Advisory Service suggests you review.

Private pensions

You do not have to rely on an employer pension scheme and can set up your own personal pension plan.

Traditional pension companies employ a fund manager who will decide where to invest. Each year, a statement is issued to show you how your pension is performing.

Private pensions are a valuable part of the mix when planning for retirement. They have attractive tax benefits which can significantly boost the sum you invest.

A SIPP is a form of personal pension. It enjoys the same tax allowances and is portable as it is attached to you, not your employer. The key difference is that you act as your own fund manager, making decisions about what investments to buy and sell. They also offer a wider range of investment options, also known as asset classes.

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.
- More about tax benefits
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.
- Why EQi for your SIPP

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.
- Our fund picks

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.

SIPP FAQs

How much can I contribute into my SIPP?

You can contribute the equivalent of 100% of your earnings, up to a maximum of £60,000. Any employer contributions are included in that limit.

Overall, the maximum that you can save in your pension is £1,073,100 – this is called the ‘lifetime allowance’ and is calculated across all pensions but excludes the state pension.

Can I invest any unused allowance?

You might be able to carry forward any unused allowance from the three previous years, into the current tax year. That’s up to £60,000 from each year.

Including the current tax year, that could mean you are able to make a pension contribution of up to £160,000 and receive tax relief.

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

If you earn over £260,000, the amount you can invest is subject to ‘adjusted income’. How much you can invest is tapered, so for every £2 above £260,000 the annual allowance is reduced by £1.

This means if you earn more than £320,000 a year (£60,000 over the threshold), the most you can pay into your SIPP each year then reduces by £50,000 to just £10,000.

The right to ‘carry forward’ any unused allowance can be useful for higher earners affected by the tapered annual allowance introduced in April 2016. With carry forward you could contribute up to three years and still benefit from the government’s tax relief.

Can I invest after I retire?

The amount you can pay into a personal pension each year is limited by your earnings. If you are a UK resident under the age of 75, you can contribute up to £2,880, whether you are working or not, and with tax relief at 20%, the total contribution will be £3,600.

How is the tax relief on my SIPP contributions reclaimed?

Your SIPP provider will automatically reclaim your basic rate tax relief from HMRC and pay it into your SIPP.

For higher or additional (over £150,000) tax rates, you can claim tax relief back via your self-assessment tax return.

What happens to my SIPP fund should I die?

When you open a SIPP, you will be asked to nominate one or more beneficiaries who will inherit the fund. If you die before the age of 75, your beneficiaries can withdraw money without paying tax.

If you die after the age of 75, any withdrawals are classed within a beneficiary’s income and taxed accordingly.

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?

Learn more

Insights

10.07.19

Underestimating the cost of living in retirement

Learn more

Insights

27.06.19

The pension pot puzzle - should you consolidate?

Learn more

Insights

11.04.19

Retirement considerations for the self-employed

Learn more

Insights

18.04.19

Is a SIPP right for your retirement?

Learn more

Insights

18.10.18

How to make your retired years golden

Learn more

Insights

12.07.18

Why you need to be sensible when planning for retirement

Learn more

Insights

14.12.17

Expectations v reality: the gap facing retirees

Learn more

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
- Read more
Insights

15.06.20

Grow your assets, get an income or preserve your capital?
- Learn more
Insights

10.07.19

Underestimating the cost of living in retirement
- Learn more
Insights

27.06.19

The pension pot puzzle - should you consolidate?
- Learn more
Insights

11.04.19

Retirement considerations for the self-employed
- Learn more
Insights

18.04.19

Is a SIPP right for your retirement?
- Learn more
Insights

18.10.18

How to make your retired years golden
- Learn more
Insights

12.07.18

Why you need to be sensible when planning for retirement
- Learn more
Insights

14.12.17

Expectations v reality: the gap facing retirees
- Learn more
07.01.21

A guide to combining your pensions in one place – and three pitfalls to watch out for
- Read more
07.01.21

When to review your pension
- Read more

SIPPs explained

Drawdown

Self-employed?

Tax and SIPPs

What is a SIPP?

Is a SIPP right for you?

Who can open a SIPP?

Investment Risk Warning

What types of pension are available?

State pension

Employer pensions

Private pensions

Three reasons to consider a SIPP

Tax

Control

Choice

Investment options: Pension v SIPP

Investment Risk Warning

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