Self-Invested Personal Pension

A Self-invested Personal Pension, better known as a SIPP, is a personal pension which the user will invest themselves.

A SIPP holder can only invest according to the usual pension rules regarding contributions and eligibility, but their flexibility to invest money where they like can give them the opportunity to make the most of their pension fund.

The number of investment options for a SIPP holder is fairly extensive and puts the saver in complete control of their money, which comes with its associated risks and no guarantees.

They can invest in individual shares, futures and options, stock market and property funds, unquoted shares, REITS, cash, commercial property (which they can subsequently rent) and government and company bonds.

A SIPP requires an active approach to investment, and the SIPP holder should be up to date with market conditions and fully informed on all their investment decisions.

Because a SIPP can decrease in value as well as increase in value, it’s important that you know what you are doing when investing your money in a SIPP.

Policyholders must be under 75 years of age and a UK citizen at the time of opening the SIPP, and are also able to draw money from their fund before they retire, which is not always possible with other types of pension.

It’s advisable to contact an Independent Financial Adviser (IFA) before jumping in and taking out a SIPP, especially given the vast range of investment opportunities.

A SIPP allows you to purchase commercial property and then collect rent tax-free. You can also borrow up to 100% of the value of your fund to aid the purchase of commercial property, and all improvements are made tax-free, as is the eventual sale of the property.

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