What is a SIPP ?

A Self Invested Personal Pension (or SIPP) is the name for a specific form of personal pension. It is a pension available to UK residents but other countries have very similar programs available.

SIPPs are government approved pensions and they allow a person to make their own investments choices from a large list of approved investments. You can’t invest in anything though – there are a number of specific investments allowed.

Many people refer to SIPPs are “tax wrappers” because they allow you to receive significant tax rebates each year. In exchange for that freedom you will receive a limit on the accessibility of that money – with the intention that it will eventually go to your retirement.

There are a number of investments available in a SIPP. They include:

• Commercial property. This is one of the more popular options
• A traded endowments policy
• Stocks & shares. But only those that are listed on a recognised exchange
• Investment trusts
• Deposit interested
• Gold bullion
• Futures and options
• Unit trusts and OEICs
• Unauthorised unit trusts that don’t invest in residential property
• Derivatives products
• Unitised insurance funds

These are the main investment choices within a SIPP. The variety of investment is really the big reason that SIPPs are gaining more popularity in the UK.