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Self-Invested Personal Pensions (SIPPs)

A self-invested personal pension (SIPP) is a pension ‘wrapper’ that holds investments until you retire and start to draw a retirement income. It is a type of personal pension and works in a similar way to a standard personal pension. The main difference is that with a SIPP, you have more flexibility with the investments you can choose.

How it works

SIPPs aren’t for everyone. Therefore, get advice if you’re thinking about this type of personal pension.

With standard personal pension schemes, your investments are managed for you within the pooled fund you have chosen.SIPPs are a form of personal pension that give you the freedom to choose and manage your own investments.Another option is to pay an authorised investment manager to make the decisions for you.SIPPs are designed for people who want to manage their own fund by dealing with, and switching, their investments when they want to.However, SIPPs can also have higher charges than other personal pensions or stakeholder pensions.For these reasons, SIPPs tend to be more suitable for large funds and for people who are experienced in investing.

What you can and can’t invest in

Most SIPPs allow you to select from a range of assets, such as:

  • Unit trusts
  • Investment trusts
  • Government securities
  • Insurance company funds
  • Traded endowment policies
  • Some National Savings and Investment products
  • Deposit accounts with banks and building societies
  • Commercial property (such as offices, shops or factory premises)
  • Individual stocks and shares quoted on a recognised UK or overseas stock exchange.

These aren’t all of the investment options that are available – different SIPP providers offer different investment options.Residential property can’t be held directly in a SIPP with the tax advantages that usually accompany pension investments.But, subject to some restrictions, including on personal use, residential property can be held in a SIPP through certain types of collective investments, such as real estate investment trusts, without losing the tax advantages. However, not all SIPP providers accept this type of investment though.

How you access money in your SIPP

New rules introduced in April 2015 mean you can access and use your pension pot more flexibly from age 55.There’s a lot to weigh up when working out which option or combination will provide you and any dependents with a reliable and tax-efficient income throughout your retirement.Be sure to use the free, government-backed Pension Wise service to help you understand your options or get financial advice.

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Paul takes the time to explain everything in detail, and going over anything at all that you don’t quite understand. His primary aim is to make sure his client gets the best from the funds that they have available.

- Adam Tootle

What I found excellent was Paul’s way of explaining a complicated procedure into layman terms. He made the whole process easy to understand and I felt that he made what was an involved process run smoothly.

- Alan Chaplin

I’ve realised (as I approach retirement) that you have to seize the moment and go on that cruise/buy the car because you have to do it whilst you have good health and Paul has always encouraged me to do this.

- Raymond Ellis

PH7 Wealth Management.

Good financial planning is key to helping you achieve your future goals and aspirations, at PH7 We work with you on your financial journey ensuring you and your families’ long-term future objectives are secure.

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info@ph7wm.co.uk
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