Benefits of a SIPP

Just like other personal pensions, SIPPs are a tax-efficient way to save for your retirement.

SIPPs vs. other personal pensions – the main differences

	SIPPs	Other personal pensions
Tax-efficient
Can be used alongside a company pension
Widest investment choice
Transfer other investments, including shares
Take your pension benefits in stages

A wider investment choice

A SIPP gives you more choice than a regular personal pension. Investment choices include:

Investment funds – professionally managed funds that invest in the shares of many companies
Investment trusts – like investment funds, but structured as private limited companies
Corporate and government bonds – sometimes called fixed interest funds, they can help you spread your investment risk
Individual company shares –invest in the shares of single companies
Commercial property – such as offices and shops
Unlisted shares – companies that are traded in secondary stock markets

Taking your pension benefits

With regular personal pensions, you have to buy an annuity when you retire. This gives you an income in retirement, but it can be restrictive.

A SIPP is different. It also gives you the option of income drawdown. So instead of using your pension fund to buy an annuity, you can withdraw part of it each year and leave the rest invested.

This option can be particularly useful if you're thinking about working part time for a while instead of giving up work completely. It also means you're not tied in to annuity rates which could be low at the time when you retire.

How can SIPPs help me achieve my retirement goals?

Invest up to £50,000 a year, tax-free

During the tax year 2013/14, you can invest up to 100% of your UK earnings in a SIPP or £50,000 – whichever is greater. You'll get tax relief on all your contributions during that year.

Is a SIPP right for you?

If you're not sure that a SIPP is the right investment for you, speak to a financial adviser.

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