What is a SIPP

A Self-Invested Personal Pension (SIPP) is a UK personal pension scheme whereby the investor can have greater personal control over the type of investment bought. SIPP's provide broad and varied investor choices for investment asset classes and allow the investor to gradually, in a tax-efficient manner, build up a significant sum of money.

When you come to retire, you are then able to convert this to a pension or alternatively to a reduced pension plus tax-free cash sum. Individual contribution to a SIPP automatically receives basic-rate tax relief. Income received from assets in the scheme remains UK income tax free and capital appreciation growth remains free from capital gains tax.

A SIPP allows you the freedom to choose where funds are invested, following within the HM Revenue & Customs Guidance Notes. HM Revenues & Customs regulate investments that are held by Registered Pension Funds through the above mentioned SIPP guidelines; a list illustrating just some of the acceptable investments is given below:

• Stock Exchange listed Companies
• Unit trusts and Open Ended Investment Centers
• Government Securities
• Offshore Funds
• Commercial Property - e.g. hotel rooms
• Hedge Funds

A SIPP does give you control, however, it also means that subsequently the risks can affect you directly. E.g. the pension that you receive once you retire will depend on two factors; firstly, on how much you paid in during the period of time you were investing and secondly how the investment you invested in performed; plus annuity rates can affect your pension depending where they lie at the time of your retirement.

A SIPP is not always suitable for every investor; therefore please check with a Financial Adviser first for personal SIPP advice