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Is a SIPP the right choice for me?


When it comes to planning for your retirement there are various options available – so which do you choose? 

You may be wondering if a SIPP – a Self-Invested Personal Pension – is right for you. Read on to find out more about how they work, and the pros and cons of this type of pension. 


How does a SIPP work? 

A SIPP is a type of personal pension. Unlike with some other pensions, though, you can choose exactly what you want to invest in – and the range of potential investments can be larger than for other pensions, too. 

The SIPP itself is just the wrapper. The investments you can choose are wide-ranging: they might include gilts, shares, funds, and maybe even commercial property in some cases. 

You choose where and how you invest. You might want to invest in funds, in individual shares, in a combination of different options. It’s also up to you whether you want to invest for the long term without making changes, or switch up your investments regularly in a bid to try and build a larger pension pot. 


What are the pros and cons of SIPPs?

A SIPP offers the same tax benefits as other pension types – including tax-free saving and tax relief on your personal contributions. You can make either regular or one-off payments and the power is in your hands: you decide where your money is invested, whether to change things around, and how often you want to make changes. 

However, there are also downsides. Any lump sum withdrawals of over 25% of your fund will be taxed. It may not be a suitable choice for those who think they may need to access their money early: your pension pot will not be accessible until you reach the age of 55. 

It may also not be a great choice for those who don’t want to be hands-on with their retirement funds. Those who choose a SIPP will need to be confident in picking their own investments – and must also bear in mind that the charging structures differ from other personal pensions. What’s more, the value of your investments can go up as well as down: is it the right choice for those looking for a safe haven for their retirement funds? 


“Stable Rise Limited is not authorised or registered by the Financial Conduct Authority. The marketing materials are not intended to provide financial advice nor promote any individual financial products.”

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