What is a SIPP pension? - Jason O'Connell

Jason O'Connell

What is a SIPP pension?

If you’re thinking about retiring, especially thinking about retiring in another country such as Australia, you’ll no-doubt have come across the term: SIPP. So what is a SIPP pension?

SIPP stands for self-invested personal pension.

A SIPP pension is a type of personal pension and acts like a ‘wrapper’ that holds your investment funds until you retire and can start to draw an income from it.

The main differences between a SIPP and a personal pension?

It’s the flexibility that a SIPP provides. You have a bit more freedom with what you can invest in. A lot of personal pensions will have a percentage-based fee, but SIPPs operate with a fixed fee. This can save you a lot of money – particularly for larger balances. SIPP’s are a lot more transparent with transaction accounts detailing each and every purchase and sale of investments and annual SIPP and advice fees.

So, what can you invest in with a SIPP?

It’s a wide range compared to the standard personal plan:

  • Direct Stocks and shares on a recognised exchange – both UK and overseas
  • Commercial property
  • Low-cost exchange traded funds (ETF’s) and Index trackers
  • Managed funds
  • Multicurrency investments
  • Unit trusts
  • Investment trusts – including real estate
  • Government securities
  • Insurance company funds
  • Traded endowment policies
  • National Savings and Investment products


As you look at different SIPP options, you’ll soon see that the exact range of investments on offer differs from provider to provider. If you’re not quite sure which route to take, don’t hesitate to get in touch for some personalised advice based on your individual circumstances.

Can residential property be held in a SIPP?

Not ordinarily. Even with a SIPP, residential property can’t be subject to the tax benefits that pensions usually offer you.

However, residential property can be held in some SIPPs, if you make it part of a collective investment like a real estate investment trust (REIT).

Of course, there will be some restrictions, most notably on personal use of the property, and not all SIPP providers will allow this investment, but it is possible.

How do SIPPs work?

As you may know, standard personal pension schemes see you pay money into an investment pool that is then managed by qualified and regulated professionals, with the aim of increasing its value over time.

And as mentioned, SIPPs allow you more freedom to choose (and therefore manage) your own investments.

This means that SIPPs are helpful for anyone looking to do something a little bit different with their future and investments. Of course, you can get a SIPP and still choose to pay an authorised investment manager to make the decisions for you. This is a popular option if you don’t want to be ‘hands-on’ all the time.

Because of fixed fees, SIPPs are also popular with people who need to invest larger funds.

Can I still access my money at 55 with a SIPP?

SIPPs are a type of personal pension, therefore since 2015 there has been added flexibility to enable you to access your cash at 55 years old. Though from 2028 this is due to increase to 57.

Of course, whether you should take this route will depend entirely on your individual needs and circumstances. It’s a big decision, so if you’re unsure of the best route please get in touch.

So overall, is a SIPP a good idea?

Again, this is a personal question and the answer entirely depends on your current financial situation and your investment objectives.

Yes, a SIPP could help increase your retirement income above and beyond standard personal person schemes, but it may not do in all cases.

There are a whole range of other options – from increased contributions in your workplace pension to wider portfolio options – that you may want to look at as well as a SIPP.

One scenario in which a SIPP is a very popular choice, however, is when people consider retiring overseas, in a country such as Australia.

How do SIPPs work if I want to retire in Australia?

Depending on your individual circumstances, including the number of pensions you hold and their value, SIPPs can be used to consolidate your UK pensions in preparation for a transfer to Australian QROPS.

It is often the case that a portion of your UK retirement savings will need to be retained in the UK for a period of time, with your age and the relevant contribution allowances, see ATO Super Contribution Allowances for more detail dictating how quickly you can transfer your UK pension to Australia.

Multi-currency UK SIPPs provide the ability to convert foreign currency (£GBP), which can mitigate the risk of a loss or volatility due to fluctuations in the £GBP – $AUD exchange rate, by investing in $AUD investments so you don’t have to worry about what the exchange rate might be in the future.

When transferring a foreign superannuation such as a UK pension to Australia, it’s imperative the ceding scheme meets the ATO’s definition of a foreign superannuation fund to ensure a compliant transfer. There are SIPP options with private binding rulings from the ATO that they meet this definition. This provides certainty in your planning and means you won’t have the hassle and expense associated with applying for a private binding ruling.

There are also SIPP providers in the UK that offer specific solutions for non-UK residents. These providers understand the challenges associated with having pensions overseas and are highly experienced in administering and transferring UK pensions in Australia.

If you’re considering a SIPP and not sure what your best options are, particularly if you’re a UK or Irish expat retiring in Australia, contact Jason for some professional and tailored advice.

Jason O’Connell is an authorised representative (“AR”) of Shartru Wealth Management operating in Australia under AFSL: 422409.

Information on this website is general advice and does not take into account your objectives, financial situation or needs. You should consider whether the advice is suitable for you and your personal circumstances.

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