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Self-invested personal pensions (SIPPs) explained

You may have heard of self-invested personal pension plans, or SIPPs, but what does it mean and how does it differ from other types of pension?

What is a self-invested personal pension (SIPP) and how does it work?

A SIPP is a type of personal pension where the investment decisions are entirely in your hands. You either manage your investments yourself or ask a professional, like a Financial Adviser to take care of them on your behalf.

The money you pay into your SIPP can usually go into a wide range of investments, like investment funds, stocks and shares and commercial property. The value of your investment will go up and down. It isn’t guaranteed, so you may get back less than you put in.

With a SIPP, you have control of how the money is invested, subject to the investment options offered by your pension provider. You, or your authorised financial adviser, have full control over your investment mix. That makes a SIPP a very flexible but potentially also complicated way of managing your savings.

You also have flexibility over your contributions with a SIPP. You can usually change the amount you save on a regular basis, add occasional contributions or even take a break from saving if you needed to.

As with all personal pensions the goal is to save for your retirement. When you reach your chosen retirement age, you'll then be able to use the money saved in your SIPP to fund your retirement. You can either take the money as cash, use it to buy a retirement income product or leave it where it is, until you need it.

 

What are the tax benefits of a SIPP?

SIPP contributions are eligible for pension tax relief. This means that the government adds money to your pension. Find out more about pension tax relief with our guide.

 

What if I'm not happy choosing my own investments?

If you want some control over how your pension is invested, but don't feel comfortable fully managing your investment options, then our Personal Pension might be right for you.

It gives you a choice of five funds based on different risk appetites. Depending on which fund you choose, we'll invest your money in a way that reflects your preferred risk level.

If you're not happy choosing your own investment, then you should speak to a financial adviser who can do this for you.

Find out more about our Personal Pension

Pension saving made simple

Sorting out your pension with us couldn't be simpler. With a quick and easy sign-up process, you can start putting money away for retirement from as little as £100.

  • A low service charge of 0.25% and a Fund Management Charge of just 0.31%.
  • Choose from five diverse multi-index funds, based on your risk appetite, or from our extended fund range.
  • Open your account, check the value of your pensions, set up regular payments or top-up your savings with our secure online account.

You can withdraw money from your pension when you turn 55 (rising to 57 from 2028 onwards). Please remember the value of your pension pot will go up and down. It isn’t guaranteed, so you may get back less than you put in.

Pensions Explained

What is a pension and how does it work?

New to pensions? We answer some key questions you might have before you start saving for retirement.

Can I get a pension if I'm self-employed?

If you're self-employed, you probably won't have a workplace pension. Find out how to make sure you can still save for your retirement.

What happens to your pensions when you die?

After you die, it may be possible for your spouse or civil partner to receive money from your pensions. Find out more here.

Need some help?

Making well-informed decisions about how to finance your retirement is important so it’s worth shopping around and using available guidance and advice, before you buy.

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Pension Wise from MoneyHelper

The government’s free and impartial service, offering guidance to make money and pension choices clearer.

To find out more or book an appointment online click below or call.

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Retirement advice

Retirement Advice Service from Legal & General

Our advisers are experts in retirement regulated by the Financial Conduct Authority, so you can trust them to provide impartial advice and a personal recommendation that’s right for you.

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