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A Self-Invested Pension Plan (SIPP) can give you more flexibility in how your pension fund is invested. Find out whether it's right for you.

SIPPS pensions

A Self Invested Personal Pension (SIPP) is a type of personal pension plan.  It works in the same way as other personal pensions in that there is tax relief on contributions and no capital gains or income tax to pay on your investments. You no longer have to buy an annuity.  However the main difference is that the SIPP has a more flexible approach to investments.

A conventional personal pension generally involves you paying money to an insurance company for investment in an insurance policy.  This means the money is invested with relatively little choice or freedom from you.

Greater range of investments

SIPPs are allowed to invest in a greater range of investments than in Personal Pension Plans, notably equities and commercial property.

You can elect to take control over the investment strategy of the SIPP, but this is usually not recommended. Normally, you would appoint a fund manager or stockbroker  to manage the investments.

When you retire and wish to withdraw funds from your SIPP normally from age 55, you can usually take up to 25% tax free cash. The remainder is then made available to provide you with a taxable income.

There's nothing stopping you taking a hybrid approach and running a SIPP alongside a more traditional pension or company scheme

There are limits to the amount you can save and still get tax relief. These change annually and are different for earners and non-earners.

To have a SIPP, you need to appoint an administration company plus a trustee, which can both be part of the same group, though in many cases the SIPP provider automatically handles this for you.

Small Self-Administered Scheme (SSAS)

A  Small Self Administered Scheme (SSAS) is a company scheme where the members are usually all company directors or key staff.  A SSAS is set up by a trust deed and rules and allows members / employers, greater flexibility and control over the scheme's assets. A SSAS has greater flexibility over investing than a SIPP.

Contributions paid to a SSAS are subject to the same tax rules as other registered pension schemes. 

SSASs are provided by insurance companies, pensions consultants and fund managers, among others.

We recommend taking advice before taking out a SIPP or a SSAS. If you would like to speak to an LGBT-friendly financial adviser about this or any other financial matter, please enter your postcode under the box on your right to find an adviser near you.


Additional Reading

  • Personal Pension Plans

    Read our guide to personal pension plans and make sure you are saving in the right way to afford a comfortable retirement.
  • New Rules on Personal Pensions

    Read about the how the new rules on withdrawing money from your personal pension affect you,
  • Pensions Glossary

    Our pensions glossary simply highlights the key terms you will hear or need to understand when talking about pensions in the UK.
  • Property as a Pension

    Thought about using property as a pension for your retirement? If you are, why not read our guide and contact us to speak to one of our advisers.
  • Inheritance Tax Planning

    Have you done any Inheritance Tax planning at all? Do you know why it's so important and the implications if you don't? Then start finding out right now exactly what it means for you.

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