What Makes a SIPP Different?
The plan is a savings vehicle for your retirement. As with a standard personal pension, with a SIPP you can, in general, access the funds from age 55. The income taken from the pension is dependent on your individual circumstances tax rules, which may change. This is usually taxed at standard income tax rates – there is usually 25% available tax free as a lump sum from the pension.
Where SIPPs differ is in flexibility of the investments you can make within the pension. With a standard personal pension, the provider has a list of available unit trusts and open-ended investment companies (OEICS), from which you choose to invest a proportion of your fund. You can usually switch easily between these funds, although depending on the provider there could be a charge. The number of funds available will depend on the pension provider.
With a SIPP, you have a much a larger investment choice, which goes beyond Unit Trusts and OEICs. This can include investments such as:
- Commercial property
- AIM stock (Alternative Investment Market)
- Listed company stocks
- Government securities
- Hedge funds
- Shares in unlisted private companies
- Real Estate Investment Trusts (REITs)
Please note, this is not an exhaustive list! SIPPs have a wide range of investment options, although there are some non-permitted investments such as residential property. It’s important to make sure your investments are permitted under HMRC regulation – SIPP providers can help you here.Contact Us