Self Invested Personal Pension (SIPP)

What is a SIPP? (or Self-Invested Personal Pension)

A SIPP is a pension ‘wrapper’ that holds investments until you retire and begin to draw an income. It works in a similar way to a standard personal pension. The main difference is that with a SIPP you typically have more flexibility when you choose what to invest into.

With standard personal pension schemes, your investments are managed for you within the pooled fund you have chosen. SIPPs give you the freedom to choose and manage your own investments. However, because this is a complex area, most people choose to have an authorised investment manager make the decisions for them.

Essential Details of a SIPP

What can you invest into within your SIPP?

Some SIPPs can also raise a mortgage against property. The rent will go towards paying down the loan and the costs of running the property.

Things to consider about SIPPs for expats

A SIPP is a personal pension. You are not required to live in the UK to be able to invest into one. However, there are important considerations if you do not live in the UK and are thinking about using a SIPP.

1.Even though a SIPP is held in the UK, it is possible to have a multi-currency SIPP. This can be a great benefit to expats as it helps to mitigate currency fluctuations on both contributions and withdrawals.

2. SIPPs abide by UK pension rules and as such are affected by any changes the UK Government makes to pension rules. A recent example of this would be the changes to the Lifetime Pension Allowance that saw a reduction in the allowance from £1.25m to £1m.

3. When drawing an income from your SIPP you will still be subject to UK income tax. If you no longer live in the UK, your income may also be subject to tax in your country of residence. Hence it is critical to understand the local tax rules as well as those in the UK.  You can then make an informed choice about how to draw an income from your SIPP.

4. Many expats will speak to a financial adviser while making a decision about their retirement plans. They will do this because it is a very complex and critical area. If you are seeking advice from an adviser in the UK, remember that they may not be fully aware of all the opportunities for expats.

Speak to us for a review

Contact us if you are thinking about setting up a SIPP or already have a SIPP. We can provide more information about your options and establish any potential areas for attention.

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If you would like to speak to one of our advisers, please get in touch today.

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