Self-Invested Personal Pensions

Pocket Money

21 Oct

(The weekly series - Pocket Money - where I explain financial basics in fewer than 200 words. Feel free to make suggestions!)

A Self-Invested Personal Pension (SIPP) is a type of pension scheme that allows individuals greater control over their retirement savings, enabling them to choose directly their investments from a wide range of options such as stocks, shares, bonds, funds and commercial property.

A SIPP is a tax wrapper and within it, you receive the same tax benefits as other pensions so for every £80 contributed the government adds £20 (covering the tax paid for basic taxpayers), while higher- and further-rate taxpayers can claim additional relief through tax returns.

You can access SIPP funds from age 55, typically taking 25% as a tax-free lump sum and using the remainder as an income.

While SIPPs provide a broader range of investment options, they also involve a higher level of personal responsibility and employers do not make contributions.

Love Eleanor. xxx

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Eleanor Burke

Self-Invested Personal Pensions

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