Advantages of a SIPP

SIPPs have proven to be highly popular since their launch in 1990. Here are some of the main reasons why people choose to plan for their retirement with SIPPs:

Tax efficiency

SIPPs offer tax efficiency in a number of ways:

• Tax relief – the UK government will pay you tax relief on your SIPP contribution at the rate of 20%.

• Income Tax and Capital Gains Tax exempt – SIPPs investments are not subject to Income Tax or Capital Gains Tax, allowing your pension fund to grow more quickly.

• Tax-free lump sum – upon reaching retirement age, you can take 25% of the value of your SIPP as a tax free lump sum, giving your retirement a welcome initial cash boost.

Investment choice

Once it was only the very wealthy who could invest in the full range of asset classes, with the rest of the population having to save for their retirement within the limited confines offered by pension fund managers. SIPPs have changed that. Now, all investors can benefit from a wide range of investment choices, guided by an IFA who will choose the right vehicle.

As of April 2005, investors have been able to use SIPPs to invest in UK and overseas property and land. Opening up real estate investment within retirement planning has led to more people saving for their future than ever before.

Pension consolidation

SIPPs are sometimes referred to as pension ‘wrappers’ because they wrap up a number of pensions within one easy to manage vehicle. Consolidating your pensions into one place makes retirement planning more straightforward than ever before.