More and more people are choosing a Self-Invested Personal Pension to plan for their retirement.
Here are the top 5 reasons why SIPPs are so popular.
1. More freedom & choice: When compared to traditional personal pensions, SIPPs are often the most appropriate ‘wrapper’ for people seeking more investment choices that might not be available with other forms of retirement plan. SIPPs allow a range of investment types and even direct investment in commercial property are allowed. With an Options SIPP, we accept transfer payments from any other registered pension scheme as well as cash or ‘in-specie’ transfers.
2. Total control: A SIPP gives you the power to take total control over how your money is invested, and what you choose to invest in. Of course, with that power comes the responsibility to make the wisest choices because the value of your investments can change. But using a SIPP appeals to people who welcome that responsibility, especially anyone who runs their own business and is therefore used to making big decisions about their financial affairs.
3. Tax benefits*: UK SIPPs offer generous tax benefits because they’re not subject to income, capital gains, or inheritance tax. In addition, it’s possible to claim tax relief on contributions into a SIPP up to a limit based on your annual earnings, or £40,000, whichever is lower. Not only that, there is no tax charge on any growth achieved from the investments within a SIPP.
*Tax regulations are subject to change – the figures quoted above are correct at the time of posting in May 2021.
4. Flexibility: You can start a SIPP whether you are self-employed or an employee, and take money from your pension as soon as you reach the age of 55, or keep it in your pension if that’s too early for you to retire.
5. React quickly to stock market volatility: With a SIPP you don’t have to wait for the approval of investment committees before taking decisive action – and that ability to grasp opportunities when they arise is another feature which appeals to those who want to make their own investment choices. Any decisions should only be made after careful consideration, so it’s wise to consult a trusted independent adviser first.