How To Start Investing Into A SIPP

SIPPs Are Superior To Personal And Stakeholder

A SIPP works in the same way as any other personal or stakeholder pension, in terms of tax benefits, contribution limits and retirement options. You make contributions, have them boosted by basic rate tax relief and claim any higher rate relief via your tax return. You leave the contributions to grow, and then, at some point from age 55 you can convert part of the accumulated fund into a tax‐free lump sum and take a taxable income from the remainder.

The main way in which SIPPs are superior to personal and stakeholder plans is in their investment choice and greater flexibility.

Stakeholder pensions have low charges, but tend to offer a limited choice of funds. Traditional personal pensions, meanwhile, tend to offer a wider choice of funds than stakeholder schemes ‐ between a dozen and several hundred ‐ but can carry hefty charges, particularly on older plans.

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