SIPP’s continue to dominate the consumer financial press – The Telegraph have just published this handy guide.
When it comes to saving for your retirement it’s time to take control and ensure you have a sufficient nest egg in place when you finally reach retirement age.
Whilst taking control and relying on yourself to build up your retirement plan may sound like a daunting task, by choosing a Self Invested Personal Pension/SIPP there’s never been a better way to do exactly that.
Here you’ll find Self Invested Personal Pensions explained and all you need to know.
What is a SIPP?
A SIPP has often been referred to as a “do-it-yourself pension scheme” and that’s exactly what it is. By choosing a SIPP you’ll have all the power and the freedom to decide exactly how your retirement savings are invested.
Control over your investments
Many pensions limit where investments can be made, whereas a SIPP will give you total control over the investments you make; which can range from the following:
• Stocks and shares (any securities that are quoted on a recognised stock exchange)
• Funds
• Gifts and bonds – including government and corporate bonds
• Exchange traded funds (ETFs)
• Exchange traded commodities (ETCs)
Is there any tax benefits?
This is another advantage to investing in a UK Self Invested Personal Pension. As soon as you put money into this form of pension, the administrator will automatically reclaim 20pc basic rate tax from the Government.
This means that if you wanted to add £1,000 to your SIPP, you would only need to pay in a total of £800 as the remaining £200 will be contributed by HMRC. This is the case for basic rate tax payers, whereas higher rate tax payers can claim even higher relief.
There is also no requirement to pay Income Tax or Capital Gains Tax on any money you make from your investments.
What are the other benefits?
Another key advantage of investing in a SIPP is the flexibility they offer; how you use it is completely up to you. You can choose to have it as your main retirement scheme or simply as a means of supplementing any other pension plans you may hold.
Accordingly you can pay into your SIPP during the same tax year as you make contributions to other pension schemes to make use of your annual tax-efficient allowance.
Can I take control of any other pension schemes I have?
Not only can you have a SIPP alongside other pension schemes, you can also take control of those other schemes and transfer them into your SIPP. Having a number of different schemes can be difficult to keep track off and time consuming when calculating your retirements savings. Moving them all into one place where they can be built on is ideal.
When can I draw an income from my SIPP?
The money accumulated in your SIPP is available to be drawn as an income as soon as you reach 55. At this point you are completely free to make all the decisions on how the fund can be taken to benefit you during retirement.
You can take an initial tax free lump sum of 25pc, with the remainder able to be drawn as income. You could even take your income through the purchase of an annuity.
Original Article : Telegraph