What is a SIPP (Self Invested Personal Pension)?
A Self-Invested Personal Pension (SIPP) is a type of pension which gives you the freedom to choose where your contributions are invested. They provide the same tax-efficient pension benefits as other types of defined contributions pensions, as well as a full range of allowable drawdown options.
Usually, SIPPs suit higher value pensions and are for people who are happy making their own investment decisions. A SIPP account allows you to see how your investments are doing at any time and make changes whenever you like.
SIPPs provide benefits on retirement based on the amount of money that has been paid in to the scheme, how long it has been invested, the level of charges and investment returns. You can begin drawing retirement benefits from the age of 55 and you don't have to stop work. Options for receiving these benefits include taking out an annuity and income drawdown.
Who can Open a SIPP?
Anyone aged 18 to 75 can open a SIPP. Even if you are not earning you can pay into a SIPP and receive tax relief. Non-UK residents can open a SIPP, but people that are not UK tax payers will not receive tax relief on any contributions made. You must be aware that your money will be locked in until you are at least 55 (57 from 2028).
SIPP vs Personal Pension
The key difference is freedom. With a SIPP, instead of handing your money over for a fund manager to invest on your behalf, you will decide where your pension is invested.
SIPPs are a form of DIY pension, which give you the freedom to choose how your contributions are made and invested. The key difference is that instead of handing your money over for a fund manager to invest on your behalf, you will decide where your pension is invested.
One of the advantages of a SIPP vs a personal pension is that SIPPs offer a wider range of investment options than traditional pensions. A SIPP allows you to invest directly in shares, as well as funds and trusts. This can have a big impact on your pension, as the performance of your investments will affect your eventual pension pot.
You can open a SIPP on your desktop, tablet or mobile. Once you have completed your application, you can begin investing in our full range of stocks. You can manage your pension on the move with our mobile app.
What can I Invest in?
SIPPs give you the opportunity to invest in a wider set of stocks and shares than traditional pensions. An ii SIPP allows you to add the following investments to your pension pot:
✓ Unit trusts
✓ Investment trusts
✓ Open-Ended Investment Companies (OEICs)
✓ Exchange-Traded Funds (ETFs)
✓ UK shares
✓ UK government bonds
✓ Bonds and other fixed-interest securities
✓ Permanent Interest-Bearing Shares (PIBS)
What are the SIPP Tax Benefits?
SIPP pension schemes provide the same tax-efficient pension benefits as other types of defined contributions pensions, meaning that you do not pay income tax or capital gains tax as your investments grow. The Government will also pay 20% tax relief on your contributions, up to the annual limit. For higher rate tax payers the level of SIPP tax relief will increase. The SIPP lifetime allowance is currently £1.055 million. You will pay tax on any amount above this limit.
Making contributions into a SIPP
You, and your employer, can make regular or one-off contributions to your SIPP, which may help to increase your income at retirement and bring you closer to your retirement goals. As long as you stay within your annual allowance, you can make your SIPP contribution at any time, and there is no maximum SIPP contribution. You can carry forward any unused allowance from the previous 3 tax years. The current tax year allowance is £40,000, and the current lifetime allowance is £1,055,000.
You can contribute up to 100% of your annual income. If you have no UK earnings, or are earning less than £3,600 a year you can still pay contributions up to £2,880 and claim tax relief of £720. We will claim your tax relief for you, and this can take between 6 - 11 weeks.
SIPP Charges and Rates
Our administration fee is just £10 whilst you are building your pension pot (special offer: pay no SIPP fee until April 2021). Once you start to take retirement benefits, there is an additional £10 monthly drawdown fee.
Our service plan is £9.99 per month. Each month you will receive a free credit worth £7.99, to use against any trade Our fair flat fees ensure that your costs stay the same even as your investments grow. Over a long-term investment, our low-cost SIPP could help you save £20,000 or more compared to our competitors.
SIPP Inheritance - what happens to my SIPP when I die?
You can pass your pension pot on to your loved ones when you die, which is a tax-efficient way of managing your estate. You simply need to keep your Expression of Wishes up to date so the trustees have an indication of how you would like your pension fund distributed. If you die before your 75th birthday and the funds are transferred within two years of your death, your pension pot will be passed on to your beneficiaries tax-free. If you die after your 75th birthday, they will be liable to pay income tax.
How do I access my SIPP?
You can access your ii SIPP 24/7 via your desktop or tablet, and you can manage your SIPP on the move with our mobile app. Our award-winning UK-based support team is available Monday to Friday from 7.45am to 5.30pm. Account holders are able to get in touch using secure messaging.
Open a SIPP by 3 April 2020 and pay no SIPP fee until April 2021.
This means your service plan fee of £9.99 covers you for all of your investment accounts. Following the offer period, the ii SIPP fee is only £10 a month more, and could save thousands compared to other pension providers who charge a percentage fee. Terms apply