What is a SIPP?

SIPP rules, benefits and pension tax relief explained

SIPPs (Self-invested Personal Pensions) are a type of pension that give you more control over your retirement savings. You can choose exactly how to invest your pension, easily consolidate several pensions in one place and review your investments at any time.

Reasons to choose a SIPP

Choice
Have your pension savings managed by an expert, invest with an adviser or choose from thousands of investments and manage them yourself.
Flexible
Buy, switch and review your investments easily. Choose exactly how to take an income from your pension when you retire.
Price
You could pay less money in fees over the long term if you choose a low-cost SIPP from the right provider.
Consolidate
Get more control and a clear view of your overall retirement savings by consolidating all your pensions with one provider*.

Who can have a SIPP?

SIPPs can be opened by almost any UK resident under the age of 75. You can open a SIPP for yourself or someone else – like a child or partner. In fact, many people choose to open a SIPP for a child to give their retirement savings a headstart. But before opening an account you should make sure you will use the extra control and choice that SIPPs give you.

Ready to transfer? It's quick and easy to transfer your investments to Bestinvest.

Pension tax benefits

Investments in SIPPs and other pensions are tax-free. You also get tax relief on all your contributions up to your pension annual allowance. The Government automatically adds 20% to anything you pay in, and higher and additional-rate taxpayers can claim back another 20% or 25% too.

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Tax-free

Investments in pensions are tax-free

How much can you pay into a pension?

  • You can usually contribute as much as you earn each tax year, up to £40,000 – this is called your annual allowance
  • The allowance is reduced to a minimum of £10,000 for higher earners
  • If you earn enough, you are able to carry over unused annual allowance from the last three tax years through pension carry forward
  • There is also a lifetime allowance of £1.03 million – this is the maximum you can save into your pension over your lifetime before you face a tax charge

What can I invest my pension in?

It’s sometimes easy to imagine your pension being a big pot of cash just waiting for you to retire. But pension money is actually invested in different types of asset classes and works hard for you. Your money could be invested in:

  • Cash
  • Equities
  • Bonds
  • Hedge
  • Property
  • Commodities

How much does a SIPP cost?

At Bestinvest we charge service fees of 0.3% a year for pensions of up to £250,000. This fee reduces for bigger pensions. There is also a £100 + VAT annual administration fee. We don’t charge anything for opening an account or for buying or selling investment funds. Share dealing costs £7.50 per trade.

More about our fees

How can I take an income?

You are entitled to take up to 25% of your pension as tax-free cash, and what you do with the remainder is up to you. You can buy an annuity, set up income drawdown or make lump sum withdrawals.

How to open a SIPP

You can open our award-winning Best SIPP by investing a lump sum, setting up regular savings or consolidating other pensions*. You can open your account online in five minutes or print the application forms and send us them through the post. And if you need some help our experts are always on hand to take your call.

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Our experts can answer all your questions about pensions. Get in touch today:

SIPPs are not suitable for everyone. They may not be right for you if you don’t want to invest across different asset classes or don’t think you will make use of the investment choices available to you. Please contact us for guidance or advice if you are unsure.

*Before you consider transferring a pension, it is important to ask yourself: Will I lose any valuable benefits or features from my existing pension plan? Will I incur any penalties on my existing pension if I transfer? Is it an occupational final salary pension scheme? (in which case it is very unlikely to be advisable to transfer) Have I considered the charges on my current plan? (a new arrangement may be more expensive – especially if you have a stakeholder pension).

Free guide

What is a SIPP?

What is a SIPP

We explain SIPP rules, tax benefits and allowances in this free guide. 

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