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SIPPs Glossary
Welcome to our SIPPs Glossary, a trusted resource designed to help you understand Self-Invested Personal Pensions in clear, practical terms.
Whether you are beginning your retirement journey or reviewing your existing pension plans, our team provides expert-driven insights and accurate financial explanations to help you make better-informed decisions.
This page is regularly fact-checked, updated, and reviewed by our financial editors to ensure reliability.
This page is regularly reviewed for accuracy.
Last Reviewed: 16 Jul 2025
What is a SIPP?
A Self-Invested Personal Pension (SIPP) is a UK pension plan that lets you choose how your retirement savings are invested.
With access to a wide range of assets, SIPPs suit those confident in making investment decisions themselves or with advice.
Key Features
Full Control Over Investments: Choose from a wide range of investments, rather than being restricted to a single provider’s fund options.
Tax Relief: Contributions qualify for government tax relief, helping your money grow faster.
Flexible Withdrawals: From age 55 (rising to 57 in 2028), you can access your funds more flexibly than with standard pensions.
Inheritance Benefits: SIPPs can be passed on to beneficiaries, often in a tax-efficient manner.
🔔Risk Reminder: The value of investments in a SIPP can fall as well as rise, and you may not get back the amount you invest. Pension rules and tax treatment depend on individual circumstances and may change in the future.
Common SIPPs Terms Explained
We’ve broken down financial jargon into plain English to make retirement planning simpler.
Investment & Contributions
SIPP Drawdown – Withdrawing money flexibly from age 55 while leaving the rest invested.
Investment Choices – The assets you can invest in through a SIPP, such as stocks, bonds, funds, and property.
Tax Relief – A government incentive to boost your pension contributions.
SIPP Contributions – Payments you make into your account, either lump sums or regular deposits.
Lifetime Allowance – The limit on the total value of your pensions before additional taxes may apply.
Portfolio Diversification – Spreading investments to manage risk across markets and assets.
Withdrawal & Taxation
Tax-Free Lump Sum – Typically, up to 25% of your SIPP can be withdrawn without tax, offering flexibility in retirement planning.
Income Drawdown – Withdraw regular payments from your SIPP while keeping your investments intact for flexible income.
Annuity – A product that converts your SIPP into a guaranteed income for life, starting at a set age and providing long-term financial security.
Benefit Crystallization Event (BCE) – When you access your SIPP or transfer funds, triggering tax charges if you exceed the Lifetime Allowance.
Inheritance Benefits – Allowing beneficiaries to inherit your SIPP funds with potential tax advantages, depending on your age and the SIPP structure.
SIPP Pension Age – The age at which you can begin withdrawing from your SIPP. The minimum age for accessing funds is currently 55 (rising to 57 in 2028).
How SIPPs Compare to Other Retirement Savings Options
When deciding between SIPPs and other pension plans, here are some key comparisons.
SIPPs vs Personal Pensions:
SIPPs offer broader investment choices, while personal pensions typically stick to provider-designed or limited fund options.
SIPPs vs Workplace Pensions
Workplace pensions automatically include employer contributions but investment options may be restricted.
Contributions
While both SIPPs and personal pensions allow you to contribute up to annual limits, SIPPs offer more flexibility in how much you contribute and when.
Investments
SIPPs provide a wider range of investment options, including stocks, property, and bonds, unlike standard pensions that have more limited choices.
Accessing Funds
SIPPs offer greater flexibility in accessing funds after 55, allowing more control over withdrawals; other pensions may have stricter rules.
Tax Benefits
SIPPs offer tax relief and more control over investments, which can lead to gains or losses depending on performance.
Frequently Asked Questions
Here are answers to some of the most frequently asked questions about SIPPs.
Whether you’re just starting to learn about SIPPs or need specific details, we’ve got you covered.
What Is the Minimum Age to Access My SIPP?
Generally 55 (rising to 57 from April 2028).
How Much Can I Contribute to My SIPP Each Year?
Contributions are subject to annual allowance limits, with tax relief available up to 100% of earned income (max cap applies).
Can I Take Money Out of My SIPP Early?
You generally can’t access your SIPP before age 55 (rising to 57 in 2028) without facing tax penalties. Early withdrawals could reduce your long-term investment growth and retirement income. Always check with an FCA-authorised adviser before taking action.
Do I Pay Tax on My SIPP Withdrawals?
Yes, beyond your 25% tax-free lump sum, income tax is applied at your marginal rate.
Can I Transfer Other Pensions into My SIPP?
Yes, transfers are allowed, but fees and terms vary.
What Happens to My SIPP When I Die?
Remaining funds can be passed on to beneficiaries, often in a tax-efficient way depending on circumstances and age at death.
Further Resources for Your Retirement Journey
Planning your retirement with confidence often requires more than numbers alone. Alongside our calculators and guides, you can explore expert articles on retirement income strategies to deepen your understanding.
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