What is a SIPP?

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SIPPs – self-invested personal pensions – give you control over where you or an advisor invest your money.  

You may also be able to gain tax relief of between 20% and 45% on what you pay in – depending on your circumstances.

When you invest in a SIPP, you or an adviser on your behalf can manage:

Which assets you invest in with your retirement savings.

How much is placed in each investment.

When and how much you want to withdraw – after the age of 55.

Tax treatment depends on individual circumstances and may be subject to change in the future.

Pensions are a long-term investment. The retirement benefits you receive from your pension plan depend on a number of factors including the value of your plan when you decide to take your benefits, which isn’t guaranteed, and can go down as well as up. The benefits of your plan could fall below the amount(s) paid in.

How does a SIPP work?

You can make either regular or one-off payments into a SIPP. 

What can I invest in with a SIPP?

You can invest in a wide variety of investments with a SIPP. These can include:

  • UK stocks and shares
  • International shares
  • Unit trusts
  • Exchange-Traded Funds
  • Commercial property
  • Gilts and bonds

Your SIPP provider determines the specific assets you can hold. Generally, investments in direct residential property are not permitted.  

How many SIPPs can I have?

You can open multiple SIPPs and hold them alongside other investments such as ISAs and workplace pensions.

The main reason investors open multiple SIPPs is to balance risk and access different investment types. While it’s possible to hold various investments within one SIPP, not all types are available with just one provider. 

How much money can I put in a SIPP?

You can pay additional funds into your SIPP (upper limits apply across all pensions savings though) – up to 100% of your annual earnings each tax year. However, the amount you will receive tax relief on is limited to £40,000 (there is currently a lifetime allowance of £1,055,000). This allowance includes pension contributions made by: 

  •  You
  • Your employer
  • The government.

If you don’t have any earnings in the tax year, you can contribute up to £2,880 into a pension plan (total value against all your pensions). 

When you have started to withdraw from it, you can still add up to £4,000 each tax year.

Advantages and disadvantages


Advantages of a SIPP

SIPPs offer a more flexible approach and greater control over your retirement savings than a standard pension. These are some of the main advantages of a SIPP:

  • You can make both regular and one-off payments.
  • Higher rate taxpayers can claim extra tax relief through self-assessment.
  • You can withdraw up to 25% as a tax-free lump sum from the age of 55.
  • There’s no minimum age restrictions for opening a SIPP.
  • It’s a way to pass on some of your wealth inheritance tax free.
  • It provides flexible retirement income options.

Disadvantages of a SIPP

SIPPs do involve some level of risk – and may not be for everyone. These are some of the main disadvantages of a SIPP:

  • As with all pensions, there are limits on tax relief – applies only to contributions up to £40,000 per tax year.
  • Lifetime limit of £1,055,000 currently applies across all your pension funds.
  • Tax is payable on lump-sum withdrawals over 25% of your SIPP fund.
  • You can only access money from your SIPP aged 55 or older.

Want to learn more about pensions?

Visit our pensions page and find out how expert advice could help you. 

Important legal information

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Schroders Personal Wealth is a trading name of Scottish Widows Schroder Personal Wealth Limited.