Self Invested Pension Advice.
A self invested pension or SIPP pension is an investment product that is used to help you with planning for retirement. A Sipp Pension is like a personal pension plan. The rules of the plan allow you to invest in a wider range of investments such as stocks and shares, investment funds, Gilts, cash and commercial property.
How does a SIPP pension work?
A Sipp Pension provider will set up and run the scheme on your behalf. Once the scheme is up and running, the trustees of the pension scheme will invest the assets held within your fund on your behalf. As the investor they will take instructions from you. There are some limits in terms of where you can invest and the trustees will help to ensure the scheme stays within the rules set down for SIPPS. The sorts of investments that could be made include commercial property, Exchange traded funds, cash or products with guarantees.
There are also limits in terms of how much you can pay into to your pension each year. The size of your pension will depend on the amount you have invested, the growth on the investment and how long you have till retirement. You will also need to take into account the cost of running the SIPP pension.
Like many other types of pensions, tax relief is normally available on the contributions into the scheme. Any investments made into the SIPP will grow in a tax efficient way.
How can a Sipp help me plan for retirement?
You can retire from the age of 55 . When you decide to retire you have a number of choices. You are entitled to take up to 25% of your pension fund as a tax free amount. The remaining amount must be used to provide an income in retirement. This will allow you to either purchase an annuity or you can draw a regular income directly from fund. There are advantages and disadvantages to both options.
Any income that you take will be taxed as income. Your financial adviser can provide help and guidance to choose the right option.
More advice on retirement planning using pensions?
If you would like to find out more about our retirement planning service please feel free to contact us on 01454 321511 or send us an email.
If you are considering investing into a self invested pension it is important to remember that the value of your sipp pension investment and the income generated could fall as well as rise and that there is no guarantee you will get back more than you invested.