SJP sipp
A Self-Invested Personal Pension, or SIPP, is a flexible type of pension that offers you access to a diverse range of investments, over and above a typical personal pension.
A SIPP is also a type of Defined Contribution (DC) based pension.
SIPPs will not be suitable for everybody and generally only those who are fairly experienced at actively managing their investment should consider this type of investment.
The levels and bases of taxation and reliefs from taxation can change at any time and are dependent on individual circumstances.
The value of a SIPP can fall as well as rise. You may get back less than the amount invested.
Why invest in a SIPP
SIPPs offer increased flexibility and control with the ability to invest in a wide range of assets.
This differentiates a SIPP from a workplace pension as it gives increased control and flexibility over to you. If this is what you are looking for, then speaking to a financial adviser is a good idea to understand what level of investment risk you are prepared to take, especially if considering different assets to invest in.
How does a SIPP work?
A SIPP works in much the same way as a standard personal pension, in that it is used to build retirement wealth over time, and then after age 55 allows you to draw down on it, with 25% payable tax free.
There are many types of pensions available, and a SIPP provides a great deal of investment flexibility, however this may not be the right choice for everyone. Having a broad range of investment choices can bring complexity, and it’s a good idea to have an understanding of how different investments work.
Personal pension or SIPP
SIPPs can be appealing due to the scope of investment assets they enable you to hold. By comparison to standard personal or stakeholder pensions, this additional investment flexibility often comes at an extra cost. You should consider this carefully if you are unsure whether you will fully utilise your SIPPs capabilities, as you could be paying more for something you might not use to its fullest. To add to the complexity, there are ‘low cost SIPPs’ and ‘full SIPPs’ which offer different levels of flexibility and cost, so it pays to speak to a financial adviser first.
What can a SIPP invest in
A SIPP allows you to invest in:
How to set up a SIPP
If you have decided this is the right choice for you, speaking to a financial adviser is the next step.
Getting your investment goals right can be a complex process; a financial adviser is the best way of making sure all areas are covered.
The value of an investment with St. James's Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.
The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.
Frequently asked questions
SIPPs work in very similar ways to a personal pension however they are more flexible and offer you more control over investment. This means a SIPP is a great option for those who want to self-manage their pension.
SIPPs operate in the same way a personal pension, so you can pass on your pension to your loved ones in the event of your death.
If you contribute more than the annual allowance, your excess contributions will not receive any tax relief, and your excess contribution will also be subject to a tax charge.
SIPPs work in the same way as personal pensions, which means they are highly tax efficient as the government provides tax relief on your contributions up to certain limits.
Yes, you are able to draw down on your SIPP from age 55 (57 from 2028). You will be entitled to 25% as a tax free lump sum, and can take the rest as taxable income or lumps sums.
The annual allowance is applied to your SIPP along with your other pensions, which means you can contribute up to £60,000 for 2024/25 per year, or, 100% of your earnings if less and receive tax relief.