sm124 - Flipbook - Page 5
Investment
key bene昀椀t of pensions generally,
years, and your earnings in the current tax year
However, it is important to exercise caution
and SIPPs in particular, is tax relief.
must be su昀케cient to support the contributions.
when transferring pensions. Some schemes o昀昀er
A
FLEXIBLE CONTRIBUTIONS
pensions or guaranteed annuity rates, which are
contribute to a SIPP, the government o昀昀ers
AND EMPLOYER OPTIONS
usually best left unchanged. If you are considering
tax relief according to your Income Tax rate.
SIPPs provide 昀氀exibility in how and when you make
making a transfer, regulated 昀椀nancial advice is
For instance, if you’re a basic rate taxpayer, a
contributions. Deposits can be made as lump
generally required for pensions with such features.
£100 contribution only costs you £80, as the
sums or monthly, usually via direct debit. Some
government adds the remaining £20. Higher and
employers might also o昀昀er the option to contribute
SMART INVESTMENT STRATEGIES
additional rate taxpayers can claim even more
to your SIPP. If you’re already saving into a
When planning for retirement, your strategy should
through their tax returns. This tax-e昀케cient setup
Workplace Pension, it’s generally best to maximise
be guided by your timeline and risk appetite. If
enables your pension fund to grow more quickly.
your employer’s contributions to that scheme 昀椀rst
you’re still some way from retiring, adopting a
before considering additional savings in a SIPP.
more growth-oriented approach, often involving
‘safeguarded bene昀椀ts’, such as de昀椀ned bene昀椀t
This can substantially boost your
retirement savings. When you
INVESTMENT OPTIONS
It’s important to recognise that pensions,
equities, might be advantageous. Regular
AND PORTFOLIO FLEXIBILITY
including SIPPs, are long-term savings options;
contributions to your fund can also bene昀椀t from
Unlike typical personal pensions, which may
you cannot access your money until you reach
pound-cost averaging, a method that helps to
restrict you to a limited range of investment
retirement age. Currently, the minimum age
reduce the impact of price 昀氀uctuations over time.
options, the top SIPPs provide access to a
for accessing pension savings is 55, but this
wide array of assets. From individual shares
will rise to 57 on 6 April 2028. Therefore, while
SIPP, it is sensible to adopt a more cautious
and investment funds to government bonds,
昀氀exibility is a key feature of SIPPs, planning
approach. Market 昀氀uctuations can considerably
commercial property and more, this 昀氀exibility
ahead is crucial to ensure they 昀椀t with your
a昀昀ect your savings if you intend to withdraw
enables you to create a personalised portfolio.
wider 昀椀nancial plans.
lump sums or purchase an annuity soon.
Whether you prefer managing these investments
Conversely, if you are nearing access to your
Choosing lower-risk investment options can help
yourself or working with a professional, SIPPs can
OPTIONS FOR ACCESSING YOUR POT
maintain the value of your fund as you reach this
be tailored to meet your speci昀椀c requirements.
Once you reach retirement age, you have several
critical stage. t
This level of customisation could appeal to
options for accessing your SIPP savings. Typically,
experienced investors who want to actively
the 昀椀rst 25% of your fund can be withdrawn tax-
manage their retirement fund. However, if you
free, while the remaining amount is taxable under
prefer to leave the detailed work to someone else,
current regulations. You can choose to withdraw
some providers o昀昀er managed account services
lump sums as needed, purchase a guaranteed
or pre-selected portfolios.
lifetime income through an annuity or leave your
If you’d like to learn how a SIPP could
money invested while using a drawdown facility to
complement your retirement plan or you need
receive income gradually.
help managing your investments, please
HOW SIPPS WORK
WITH ANNUAL ALLOWANCES
For those who favour 昀椀nancial security over
Ready to take control
of your retirement?
get in touch with us and take the next step
SIPPs operate within the tax rules that apply
investment risk, annuities o昀昀er peace of mind.
towards securing your 昀椀nancial future. We
to all pension types. The annual allowance for
They can be tailored to suit your circumstances,
look forward to hearing from you.
pension contributions in the current 2025/26 tax
such as providing a spouse’s pension after death
year is £60,000. This includes both your personal
or higher rates for individuals with certain health
contributions and those made by your employer.
conditions. Equally important, it’s prudent to
However, you cannot personally contribute more
compare the best annuity rates available.
than 100% of your UK-earned income or £ 3,600
This article does not constitute tax, legal or 昀椀nancial
advice and should not be relied upon as such. Tax
treatment depends on the individual circumstances of
each client and may be subject to change in the future.
per annum, if more, as tax-relievable contributions.
SHOULD YOU
Additionally, if you are a very high earner, your
CONSOLIDATE YOUR PENSIONS?
For guidance, seek professional advice. The value of
annual allowance might be reduced to as little as
If you have held multiple jobs over the years, it’s
your investments can go down as well as up, and you
£10,000 due to tapering rules. These complexities
likely you’ve accumulated a variety of pension
mean that professional advice could be essential
schemes. SIPPs can be an excellent way to
for maximising your allowances e昀昀ectively.
consolidate these into a single, more modern
Another important rule is the ‘carry forward’
and 昀氀exible account. De昀椀ned contribution
may get back less than you invested.
A pension is a long-term investment not normally
accessible until age 55 (57 from april 2028 unless the
provision. This enables you to use unused
pensions, such as personal pensions, can often
plan has a protected pension age). The value of your
annual allowances from the past three tax years.
be easily transferred into a SIPP. This simpli昀椀es
investments (and any income from them) can go down
To qualify, you must have been a member of a
management and o昀昀ers better oversight of your
as well as up, which would have an impact on the level
registered pension scheme during each of those
retirement plans.
of pension bene昀椀ts available.
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