SIPP on This: Self Invested Personal Pension

Ok, this one is for the UK young adults out there. Are you familiar with a SIPP? A SIPP is a Self Invested Personal Pension and it is very similar to the Roth IRA in the US. IRA stands for individual retirement account and provide similar tax benefits to that of a SIPP retirement pension in the UK. That is because SIPPs are pensions plans that give you the freedom to decide exactly how your retirement savings are invested. A SIPP has also been known as a “do-it-yourself pension plan”. If you are comfortable investing your own money and want to have the tax benefits that come along with saving for retirement then this plan could be for you.

When Can I Withdraw from a SIPP?

At the age of 55, you will be able to start withdrawing your pension. This is the minimum age for penalty free withdrawals. You can then decide how you want to use the fund built up in your SIPP to provide you with an income. But before then, you will have to contribute into your SIPP to take advantage of the benefits. You can make one off payments or regular payments into your SIPP, which are known as contributions to take advantage of the generous tax benefits available.

You can take up to 25% of your fund as a tax free lump sum and use the balance to provide you with a pension through income withdrawal from your SIPP or through the purchase of an annuity, from your choice of insurance company. One of the biggest advantages of a SIPP over a personal pension is the enormous range of investment opportunities that SIPPs offer and your ability to manage and change your investments as and when you want to.

What Can I Invest in Inside of my SIPP?

Here are some of the investment options offered to you as a SIPP holder.

Shares quoted on a recognized stock exchange that can be settled within CREST
Over 2,300 unit trusts and OEICs.
Government bonds
Corporate bonds
Permanent interest bearing shares (PIBS)
Warrants
Investment trusts
Exchange traded funds
Exchange traded commodities

Are you a UK investor and familiar with SIPPs?

http://www.theretiredlandlord.com The Retired Landlord
It’s always interesting to read how different countries’ pension plans differ from those in the U.S. It’s a great reminder that there are many sustainable ways to do something.
Ethan’s Money
In the UK, the structure of all pension schemes is pretty similar – income tax relief on contributions, the option to take 25% of your pension pot as a tax free lump sum and a requirement to spend the rest of your fund to purchase an annuity income stream.
If you are employed in the UK, the best option is usually your company pension scheme, as it’s likely that your employer will also contribute into your pension fund. For a lucky, dwindling proportion of people, you may also have a defined benefit (or final salary) pension scheme, where the employer bears all of the employment risk.
However, for the self-employed, a Self Invested Pension Plan or SIPP is a great option. You get to invest for your future. You avoid paying fees to one layer of investment advisers. And you get all the fun of working out which equities to invest in. Just so long as you’re an experienced and expert stock picker ….
- http://youngadultfinances.com LaTisha Styles
  Thanks for the additional commentary!

SIPP on This: Self Invested Personal Pension

When Can I Withdraw from a SIPP?

What Can I Invest in Inside of my SIPP?

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