Why Take Out a SIPP (Self-Invested Personal Pension)?

As with all personal pensions, contributions to self invested personal pensions (SIPPs) receive the following tax benefits:

• automatic basic-rate tax-relief for contributions of up to 100% of the member's earned income (up to the annual allowance)
• higher-rate taxpayers can claim additional relief through their tax returns
• Employer contributions are allowable against income or corporation tax
• income from assets within the scheme is untaxed
• growth from assets within the scheme is free from capital gains tax (CGT)

However, in addition to these benefits, SIPPs also offer many investment advantages over standard personal pensions such as choice, flexibility and diversification potential. A SIPP investor can choose from (and switch between) a wide range of investment trusts, unit trusts and Open Ended investment Companies (OEICs), from across the market, thus creating a diverse, rich investment portfolio that has just the right level of risk the investor is comfortable with. The allowance of direct investment in shares and stocks means that a discretionary fund manager can run a portfolio of collective investments and/or shares for the investor within their SIPP.

SIPPs can borrow up to 50% of the net value of the pension fund to invest in any assets.