A Self-Invested Personal Pension (SIPP) is a special type of account that helps you save for retirement in a tax-efficient and flexible manner.
How SIPPs Work:
SIPPs operate similarly to other personal pensions. You can contribute money whenever you like, and the government provides an additional 20% as pension tax relief. If you pay a higher tax rate, you might even get more money back through your tax return. Once your money is in your SIPP, it can grow without being subject to UK capital gains and UK income tax. However, there are regulations in place, like contribution limits for tax relief, the earliest age for benefit withdrawals, and tax penalties on excess benefits.
Benefits of SIPPs:
With a SIPP, you can:
Save for retirement in a tax-efficient and flexible manner.
Build up a pension fund for future income and tax-free cash.
Manage your pension investments.
Transfer funds from other suitable pension plans.
Specify who should receive benefits in case of your passing (though the final decision rests with the Scheme Administrator).
Using Plum to Manage Your SIPPs:
With Plum, you can consolidate your existing pension funds into a single, easy-to-use online account. This allows you to monitor and manage your pension and contributions all in one app.
Important Note: Plum's SIPP does not currently provide drawdown products unless you reach the age of retirement. If you wish to access benefits or purchase a lifetime annuity, you'll need to transfer your Plum SIPP fund to another pension plan.