Share Prices & Company Research


24 August 2018

Join the SIPP revolution!

We all have dreams and goals throughout our lives, but how can you know that your pension will provide the financial support required to keep your retirement dreams alive? It’s something we all tend to put off, it’s a job for tomorrow, but planning your retirement and getting your finances in order is well worth the time and effort. If anything, knowing that you have a plan brings peace of mind.
Since the introduction of the pension freedoms in April 2015, provided you are aged 55 or over, you can benefit from greater pension flexibility which enables you to take money out of your pension whenever you want to. This increase in flexibility has seen the Self Invested Personal Pension (SIPP) become even more popular over the last three years.
SIPPs Explained
The SIPP is rapidly growing in popularity as a genuine alternative to the traditional personal or stakeholder pension. Ultimately a SIPP allows you to take control of your pension by managing the funds you will have available in retirement. SIPP investors are usually either comfortable with their own investment decisions or will opt for an investment manager to manage the investments in their SIPP. Pension investments are managed specific to individual circumstances giving the opportunity to incorporate a wider range of investments options such as investment trusts, corporate bonds, quoted shares and even cash.  Fintech company Origo’s Managing Director Anthony Rafferty reports that “SIPPs in particular have seen an influx of business” as an increasing number of people become eligible to benefit from the flexibility of the pension freedoms. Transfers into SIPPs have increased by almost 98% since the original announcement in 2014. This increase in transfers has also seen the value more than double during the same period.
The tax benefits of a SIPP
Getting tax relief on your SIPP isn’t unlike any other pension. Basically, for
any money you invest, the government will contribute 20% into your pension pot, with this increasing to 40% for higher-rate taxpayers or 45% for additional-rate taxpayers – so why wouldn’t you take advantage?
This means if you are a basic-rate taxpayer, for every £8,000 you pay into a SIPP the government will pay £2,000 to make it up to £10,000. If you are a taxpayer at the higher rate then you have the potential to receive a further £2,000 as a rebate. So, the total cost for the higher rate taxpayer is £6,000 for a £10,000 SIPP.
You may be able to contribute as much as 100% of your earnings or £40,000 (whichever is lower), and attract tax relief, but these may differ depending on your circumstances.
The pension freedoms allow those aged over 55 to make a 25% lump sum withdrawal tax free. Anything else is taxed at the income tax rates applicable to you. If you cash in all of your pension in one go, you are going to incur a significant amount of income tax.
As more people are disillusioned by their current pension, they are looking to take control and reap the potential benefits of investing in higher-risk products, with more flexibility. The temptation to withdraw from existing occupational pension pots, which often provide a guaranteed income for life, and transfer these to SIPPs can expose you to higher-risk investments.

These risks can by managed by you or if you wish to invest in a SIPP, and are looking for the expertise of an investment manager, our investment management services may be suitable. We will take a bespoke approach to constructing your portfolio and meeting your objectives, in line with the risk levels suitable to you at your stage in life, as well as making adjustments when required as you move closer to your retirement.
However, if you want to take control over your pension fund, how it is invested or need the flexibility to make changes as your lifestyle changes, Redmayne Bentley also offers access on an execution-only basis, whereby you make your own investment decisions.
If you would like to discuss the investment options available to you, please contact your usual Redmayne Bentley office, visit or call 0344 259 0001.
Please note that tax treatment depends on the specific circumstances of each individual and may be subject to change in the future. Investments and income arising from them can fall as well as rise in value.
Join the SIPP revolution!
Newsletter sign up
We use cookies on this site to improve your experience and help us provide you with a better website. An explanation of the cookies we use and their purpose can be found within our Cookie Policy. Your continued use of this site means you consent to the use of cookies.