A Self-Invested Personal Pension (SIPP) is a type of pension available in the UK that gives you more control over how your retirement savings are invested. Unlike standard workplace pensions, where investments are managed for you, a SIPP lets you choose and manage your own investments. This means you can tailor your pension to suit your goals and risk level.
How Does a SIPP Work?
You can contribute to a SIPP either regularly or with lump sums. The UK government adds tax relief to your contributions:
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20% for basic-rate taxpayers
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40% for higher-rate taxpayers
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45% for additional-rate taxpayers
Your money is then invested in assets you choose, such as:
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UK and international shares
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Investment funds like ETFs and index funds
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Bonds and gilts
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Commercial property
All growth within a SIPP is tax-free, meaning you don’t pay capital gains or dividend tax on your investments.
From age 55 (rising to 57 in 2028), you can start accessing your SIPP. You can withdraw:
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25% tax-free (either all at once or in parts)
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The remaining amount is taxed as income
You can choose to take your pension as a flexible drawdown or buy an annuity for a regular income.
Benefits of a SIPP
✅ More control: Choose where and how your money is invested
✅ Tax relief: Get back up to 45% of your contributions
✅ Tax-free growth: Investments grow without tax deductions
✅ Flexible withdrawals: Decide when and how to take your money
Things to Consider
⚠ Risk: Investment values can rise and fall
⚠ Fees: SIPPs may have higher charges than other pensions
⚠ No guaranteed income: Returns depend on how your investments perform
Who Should Consider a SIPP?
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Self-employed individuals without access to workplace pensions
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Experienced investors who want more control
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High earners looking for tax-efficient retirement planning
How to Open a SIPP
You can open a SIPP through providers like Hargreaves Lansdown, AJ Bell, Interactive Investor, or Fidelity. Compare their fees, investment options, and online tools to find what suits you best.
Final Thoughts
A SIPP can be a powerful tool for building your retirement fund if you’re confident in managing your own investments. It offers flexibility, tax benefits, and control—but also requires a good understanding of investing. Consider your goals and comfort with risk before choosing a SIPP.