Sipp Pension

Differences between a SIPP and a Personal Pension?


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  Welcome to The Complete Pension Guide 2017!

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Differences between a SIPP and a Personal Pension?

Before Pension A-Day ( a key reform period) SIPPs were largely the domain of wealthy investors. Recently the opportunities provided by SIPPs have become more widely appealing.

SIPPs are essentially just a different type of personal pension. The contribution limits and tax rules are the same for both investment vehicles. Historically the biggest difference has been that SIPPs have access to a much larger fund choice. With the increase in externally managed funds available to many personal pensions this difference has become somewhat blurred in recent years.  SIPPs can own commercial property where personal pensions cannot. SIPPs can borrow (up to 50% of net assets) unlike personal pensions.

SIPPs like standard personal pensions access different funds depending on the provider. For example several of the large providers have 90% of funds invested in their own products. Supermaket funds have a bit more variety normally. Providers targetting high net worth individuals normally have a hugely wide range and are at the other end of the spectrum. The size of the difference between SIPPs and Personal Pensions depends on whether you are comparing the most flexible Personal Pension with the least flexible SIPP or are looking at the best of each.