In todays video I’ll be explaining what a SIPP is and why you might want to open a a SelfInvested Personal Pension. A SIPP is a type of personal pension that lets you take control of your retirement money and investments.

FREEDOM OF CHOICE
Some of your older personal pensions may have relatively high fees compared to a SIPP and the investments may not be performing well. You might also be holding investments you wouldn’t necessarily have chosen yourself. You may have several pensions from multiple past employers and want to consolidate these so you have them all in one place and can monitor how your investments are performing. This will give you greater control, and help you to plan for your retirement more effectively.
You have much more freedom with a SIPP to invest in a variety of different investments. You could either choose a ready made investment portfolio or you could choose to invest in investments you have handpicked yourself. This is personally what I choose to do in my own SIPP. Investment choices can include actively managed funds, shares, investment trusts and bonds. You can make changes to your investments in your Self Invested Personal Pension whenever you like, including making any changes to your portfolio as you get older if your appetite for risk lowers closer to retirement.
I will be be releasing a video in the next week comparing SIPP providers, including their fees and offerings so if you would like to see that video then please do subscribe.

TAX
In the same way as other pensions, you can add money into a SIPP whenever you like. If you’re under 75 and resident in the UK, you can get an additional top up from the government in the form of tax relief. This extra contribution from the government is called basicrate tax relief. You will usually get at least 20% tax relief on anything you pay in and if you pay tax at a higher rate you can usually claim even more tax relief through your tax return.

EXAMPLE

If you wanted to make a £1000 contribution to your pension, you’d actually only need to pay in £800, and the government would pay £200 of basicrate tax relief into your pension.
When your money is in your Self Invested Personal Pension, your money can also grow free from UK income and capital gains tax. To receive tax relief on your personal contributions, you can only contribute as much as you earn, or £3,600 (whichever is greater), each tax year.

WITHDRAWING YOUR PENSION
When you reach 55 or your 57th from 2028, you can start withdrawing your pension, even if you’re not yet retired. You can usually take up to 25% of your pension pot tax free. The rest of your withdrawals will be taxed as an income.

DOWNSIDES/ NEGATIVES of a SIPP
You will be responsible for your investments, and obviously as with any invested pension portfolio the value of your investments can fall as well as rise. You will have to be relatively financially savvy to have a SIPP. Although I mentioned flexibility and control of your investments as a positive point, this does mean that you will have to regularly review your own investments to make sure they match your retirement goals.

TIMESTAMPS

00:0000:43 SIPP Intro
00:4303:55 Why open a Self Invested Pension
03:5505:29 Tax and SIPP's
05:2905:55 Withdrawing at Retirement
05:5507:54 Cons/Negatives & SIPP Outro

Investing Qualifications I hold:

International Certificate in Wealth and Investment Management (Chartered Institute for Securities & Investment)

**Books I've Enjoyed**

How to Own the World by Andrew Craig: https://amzn.to/3yx1GpY
The Psychology of Money by Morgan Housel: https://amzn.to/3dzdAa3
The Warren Buffett Way by Robert Hagstrom JR: https://amzn.to/3xnWumF
Naked Trader by Robbie Burns: https://amzn.to/3fDRAfj
The Little Book of Common Sense Investing by John Bogle: https://amzn.to/3rylk3U

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DISCLAIMER

Any information given in this video is for entertainment purposes only, and does not act as legal or financial advice. Your financial decisions are your own responsibility, and if you do require advice please contact a qualified Financial Adviser, Wealth Manager or Financial Planner.