Self-invested personal pension

Self-invested personal pension

A Self-Invested Personal Pension (SIPP) is the name given the type of UK government approved personal pension scheme, which allows individuals to make their own investment decisions from the full range of HM Revenue & Customs (HMRC) approved investments.

It is one of two types of UK personal pension scheme, the other being a Personal Pension Plan, a subset of which is the Stakeholder Pension Plan. SIPPs, in common with personal pension schemes, are tax "wrappers", allowing tax rebates on contributions in exchange for limits on accessibility. The HMRC rules allow for a greater range of investments to be held than Personal Pension Plans, notably equities and property. Rules for contributions, benefit withdrawal etc are the same as for other personal pension schemes.

Investment choice

Investors may make choices about what assets are bought, leased or sold, and decide when those assets are acquired or disposed of, subject to the agreement of the SIPP trustees (usually the SIPP provider).

The range of assets permitted by HMRC includes : cite web
title = IR76 Personal Pension Scheme Guidance Notes
publisher = Her Majesty's Revenue and Customs (HMRC)
url =
format = PDF

* Stocks and shares listed on a recognised exchange
* Futures and options traded on recognised futures exchange
* Authorised UK unit trusts and OEICs and other UCITS funds
* Unauthorised unit trusts that don't invest in residential property
* Investment trusts subject to FSA regulation
* Unitised insurance funds from EU insurers and IPAs
* Deposits and deposit interests
* Commercial property (inc. hotel rooms)
* Ground rents
* Traded endowments policies
* Derivatives products such as a Contract for difference (CFD)

Investments currently permitted by primary legislation but subsequently made subject to heavy tax penalties (and therefore typically not allowed by SIPP providers) include :

* Gold bullion
* Any item of tangible moveable property (whose market value does not exceed £6,000) - subject to further conditions on use of property
* other "exotic" assets like vintage cars, wine, stamps and art
* Residential property


The rules and conditions for a broader range of investments were originally set out in "Joint Office Memorandum 101" issued by the Inland Revenue in 1989. Today the rules have been incorporated into "The Personal Pension Schemes (Restriction on Discretion to Approve)(Permitted Investments) Regulations 2001 (SI 2001/117)" which came into force with effect from 6 April 2001.


Unlike conventional personal pensions where the provider as SIPP trustee has ownership and control of the assets, in a SIPP the member may have ownership of the assets (via an individual trust) as long as the scheme administrator is a co-trustee to exercise control. In practice, most SIPPs do not work this way and simply have the provider as SIPP trustee.

The role of the scheme administrator in this situation is to control what is happening and to ensure that the requirements for tax approval continue to be met.

The pensions industry has gravitated towards three industry terms to describe generic SIPP types:

1. Deferred. This is a type of scheme in which most or all of the pension assets are generally held in insured pension funds (although some providers will offer direct access to mutual funds). The deferral of self-investment or income withdrawal activity until a later date gives rise to the name. These schemes are in effect conventional personal pensions with a 'SIPP option' that one may exercise later. In some newer schemes of this type, there are over 1,000 fund options, so they are not as restrictive as they once were.

2. Hybrid. A scheme in which some of the assets must always be held in conventional insured pension funds, with the rest being able to be 'self-invested'. This has been a common offering from mainstream personal pension providers, who require insured funds in order to derive their product charges.

3. Pure. Schemes offer unrestricted access to many allowable investment asset classes.

Tax treatment

Contributions to SIPPs are treated identically to contributions to personal pensions. Individual contribution will receive automatic basic-rate tax-relief; higher-rate taxpayers can claim additional relief through their tax returns. Employer contributions are allowable against corporation or income tax.

Income from assets within the scheme is untaxed. Growth is free from capital gains tax (CGT).

Pension income provided either from an annuity or via income withdrawal is taxed as earned income at the members highest marginal rate.

Investors can invest up to 100% of earned income up to the annual allowance of £235,000 for the 2008/09 tax year. Also, if the fund value exceeds £1.6 million at retirement during the 2008/09 tax year, then the amount above £1.6 million will be taxed at 55%.

SIPPs can borrow up to 50% of the net value of the pension fund to invest in any assets, although in practice SIPP trustees are only likely to permit this for commercial property purchase.



  • #
  • External links

    *cite web
    title = Self Invested Personal Pension (SIPP)
    publisher = The Pensions Advisory Service (TPAS)
    url =

    *cite web
    title = Introduction to Self Invested Personal Pensions (SIPP)
    publisher = Owner Invest - Specialising in SIPP plans
    url =

    *cite web
    title = Introduction to Pensions & SIPPs
    publisher = - Specialising in Unit Trust investment via SIPPs
    url =

    *cite web
    title = Self-invested personal pensions
    work = MONEYmadeclear
    publisher = Financial Services Authority
    url =

    *cite web
    title = SIPPs
    publisher = Association of Member-Directed Pension Schemes (AMPS)
    url =

    *cite book
    last = Lowe
    first = Jonquil
    title = Pension Handbook (Which Essential Guides)
    publisher = Which? Books
    date = 15 May 2006
    url =
    isbn = 978-1844900251

    Wikimedia Foundation. 2010.

    Нужно сочинение?

    Look at other dictionaries:

    • self-invested personal pension — (SIPP) A personal pension scheme where the member, and not the pension plan provider or trustees, determines the investment strategy. Practical Law Dictionary. Glossary of UK, US and international legal terms. 2010 …   Law dictionary

    • Personal pension scheme — A Personal Pension Scheme (PPS), sometimes called a Personal Pension Plan (PPP), is a UK tax privileged individual investment vehicle, with the primary purpose of building a capital sum to provide retirement benefits, although it may also be used …   Wikipedia

    • Self-invested Pension Plan — ( SIPP) A personal pension where the person saving for their retirement is given the flexibility to make their own investment decisions …   Financial and business terms

    • Pension system — Pension systems in various countries= *Canada Pension Plan *Chile pension system *Superannuation in Australia *Social Security (Australia) *Indian pension system *Social security (Sweden) *Retirement plans in the United States *Social security… …   Wikipedia

    • Pension provision in the United Kingdom — UK Pension Provision falls into seven major divisions; Basic State Pension, State Second Pension (S2P), Occupational Pensions, Stakeholder Pensions, Group Personal Pensions and Personal or Individual Pensions. Personal Accounts automatic… …   Wikipedia

    • Pension simplification — In 2004 the Labour government announced plans to rationalise the British tax system as applied to pension schemes; these changes are referred to as pension simplification. The new single tax regime were adopted on 6th April 2006; this date is… …   Wikipedia

    • Pension — This article is about the retirement income arrangement. For the type of lodging, see Pension (lodging). For the mortgage repayment scheme, see Mortgage loan. Financial market participants …   Wikipedia

    • Turkish Pension System — Individual Retirement, Savings and Investment SystemThe Individual Retirement Law in Turkey has been legislated in parliament and published in the Official Gazette on May, 7th 2001. The law will be enacted after 6 months following the publishing… …   Wikipedia

    • Pensions in the United Kingdom — fall into seven major divisions; Basic State Pension, State Second Pension (S2P), Occupational Pensions, Stakeholder Pensions, Group Personal Pensions and Personal or Individual Pensions. Personal accounts, automatic enrollment and the minimum… …   Wikipedia

    • Fund Platform — A Fund Platform (also know as a Fund Wrap or Fund Supermarket) are terms for a type of UK investment vehicle, the basic feature of which is that one has an account with one organisation/provider, within which funds from any of usually several… …   Wikipedia

    Share the article and excerpts

    Direct link
    Do a right-click on the link above
    and select “Copy Link”