Summary of Self-Invested Personal Pesnions (SIPPs) – SIPPs V Stakeholder Pensions

Summary of SIPPs – Self-Invested Personal Pensions (SIPP) versus Stakeholder Pensions

There are lots of similarities between Self-Invested Personal Pension Plans (SIPPs) and Stakeholder Pensions but there’s also some key variations.

Ideas assess the 2 options to be able to help educate the beginner investor concerning the factors that needs to be considered when choosing probably the most appropriate arrange for their individual conditions.


Both SIPPs and stakeholder pension schemes are Personal Pension Plans and therefore are controlled by exactly the same contribution allowance and tax relief rules. The best choice for that individual depends upon a variety of factors for example personal conditions, size pension funds/pension contributions, informed understanding from the investment landscape and also the related risks, in addition to their individual lengthy-term objectives.

If someone embarks upon a conventional, standard pension plan through an insurer or their employer, there is a selection of a precise quantity of funds by which their pension contribution could be invested. These money is selected through the type of pension provider. A SIPP provides a far bigger and much more varied fund choice, selections being produced by the person investor themselves. There’s also perhaps greater versatility having a SIPP as, for instance, individual company shares can be purchased to become put into a SIPP.


A stakeholder pension plan is a kind of personal type of pension made to offer simplicity and security. It’s a money purchase arrangement structured to supply a lump sum payment and earnings in retirement. This type of pension plan incorporates some minimum standards set through the Government:

• They are able to accept contributions from no less than £20 and therefore are susceptible to an optimum annual control of 1.5% for that first ten years, shedding to at least onePercent after that

• Investment choice could be limited and investments are managed through the pension provider

• There aren’t any penalties for growing, decreasing, stopping or restarting payments

• There aren’t any penalties for transferring to a different pension arrangement.

When searching at stakeholder pension plans, it is vital to think about that the control of 1% per year is obtained from the need for the accrued fund every year and never 1% from the pension contributions. And so the worth more a pension fund becomes, the greater the costs become.

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