What's SIPP?: Your Favourite Pension Acronym (Possibly)

When you start a new job, it’s the employer’s responsibility to enrol you into the workplace pension plan which means you, them and the Government will all be paying into this (you can opt out). However, the majority of us don’t stay in the same job the whole of our working lives so as you move into a new job with a different pension provider and a new pension pot, your old one can get lost.


It’s advisable that as you move through these jobs, you move your previous savings into a self-invested personal pension, or a SIPP.


SIPPs aren’t just for storing all your different workplace pension savings; just consider it your new pension pot. The Government will still pay into this as you do (5% for the basic-rate tax-payer).

If you move into a job and you set up a SIPP for your previous workplace pensions, you and your employer have a number of options. You can be enrolled into the workplace pension and take your employer and government contributions in there, or your employer can pay into your SIPP too. They can also pay into both. Paying into your SIPP is beneficial because National Insurance won’t be paid on those contributions.


- SIPPs are also a great way for self-employed people to save for their retirement, as the Government is still making the contributions that you wouldn’t get with a regular savings account.


- You can also pay into a SIPP as and when you like without needing to opt out or commit to monthly payments.


- If you pass away before the age of 75, (sorry to be morbid) your next of kin can withdraw money from your pension without paying tax. Withdrawals will be taxed if you die after the age of 75. Bear in mind you can’t access your pension until the age of 55.



Recap? SIPPs are an efficient way to save for retirement, allowing you to receive money from your employer and/or the Government as well as contributions made by you. The tax relief makes it a better way to save if you’re self-employed and you can pay previous workplace pensions into the one SIPP.

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