20 Feb 2015, 9:50pm


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  • SIPP

    Self Invested Personal Pension

    A tax-advantaged pension savings wrapper – can contain shares, cash and some other types of investment. You contribute to a SIPP from pre-tax pay (gross pay) but you pay tax when you draw from it. In the UK you have to be at least 55 (rising to 57) to draw from a SIPP. Most people earn more when working that as a retiree, so a SIPP normally reduces the overall tax paid. Plus you get to take 25% of it tax-free in a PCLS

    Contrasted with an ISA wrapper where the tax is paid on the way in, not the way out, and there is no age restriction

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