- Sipps offer exposure to investments unavailable in workplace pensions
- They may also offer more ways to take benefits
- But they are likely to cost more
Pensions, such as a self-invested personal pension (Sipp), are a key way to save for retirement. Government tax relief at your marginal income tax rate of 45, 40 or 20 per cent boosts what you put in, and the investments within them grow free of income, dividend and capital gains tax (CGT).
If you're employed, your first port of call for pension saving should be your workplace scheme as you also get an employer contribution, further boosting your pot. And your own and your employer’s contributions can achieve extra tax efficiency by being made on a salary sacrifice basis, whereby they are put directly into the pension rather than given to you first, hence it isn't taxed. But, after you have contributed the necessary amount you need to get the maximum possible contribution from your employer, a Sipp is an option if you still have money to save or invest, and enough pension annual allowance left.