SIPP (Self Invested Personal Pension)

A Self Invested Personal Pension (SIPP) is a self-managed UK pension. The advantages of a SIPP are:

  • Control: you have full control over how your SIPP is invested.
  • Flexibility: a A SIPP can be invested in a wide range of possible investments including shares, bonds, funds of various types and even derivatives.

The disadvantages of a SIPP are:

  • Administrative costs may make a SIPP more expensive for smaller amounts. However, they may be cheaper in some circumstances because the range of investments allow many low cost options (buy and hold and other passive strategies, a full range of tracker funds etc.).

Most brokers will open an account for a SIPP. Some provide SIPP administration, others may work with a variety of SIPP providers. Either way, the management of a SIPP is very similar to any other portfolio traded through a broker.

The most important restrictions on a SIPP are those of any pension scheme: the money has to remain in the scheme and must be reinvested to provide a retirement income. This is the price paid for the tax advantages given to pension schemes.

Copyright Graeme Pietersz © 2005-2020