What should I consider before opening a SIPP account?
You can use a SIPP to hold your investments and benefit from the significant tax advantages they offer provided you understand the limitations as to how you can withdraw the benefits from your pension:
- You can receive 25% of the pension fund value as a tax free lump sum.
- The remaining benefits are drawn as a gradual income which is subject to your tax rate at that time, though this is potentially a lower tax rate than that you currently pay.
- You have to wait until you are age 55 before you can make any withdrawals.
You also need to be comfortable that you have the skill and experience to make your own investment decisions and have sufficient time to monitor investment performance. However, if you are an experienced investor then managing your own pension may be for you. If you are unsure, please seek independent financial advice.