A Self-Invested Personal Pension (SIPP) is a type of personal pension scheme that lets anyone with a taxable income in the UK invest in a complete range of investments that are approved by HM Revenue and Customs.
Although all kinds of assets are permitted in an SIPP, only some types are subject to taxes. One investment type that is not subject to a tax charge is gold bullion, which has been permitted by the UK Treasury as an allowed investment instrument in SIPPs since 2006.
Below we review the main pros and cons of investing in physical gold bullion with an SIPP:
- Investors are able to decide which assets are bought, leased, and sold, and they can also decide when those assets are acquired/disposed of, depending on the terms of the agreement set forth by the trustee (plan provider). This means you’ll have full control over how your pension savings are being invested.
- Serves as a hedge against inflation and safeguards your investment savings from devaluation. For this reason, advisers recommend devoting at least 5%-20% of your total investment portfolio to precious metals.
- The UK Government will provide an income tax rebate equal to up to 45% of the cost of contributions made to an SIPP. In other words, if you purchase £10,000 in gold bullion for your SIPP this year, you would receive an income tax rebate of up to £4,500.
- There are no capital gain taxes charged on any gains achieved through gold investments made in an SIPP, so you won’t be taxed on any potential profits earned.
- The management costs for holding gold in an SIPP are very low – investors pay less than 10% of the charges seen in other unit trusts.
- In addition to gold investing, an SIPP can be used to facilitate a broad range of investment types. In fact, investors can choose from thousands of funds and financial instruments, many of which are offered to pension holders at a reduced charge.
- Your SIPP trustee will typically handle the legal responsibilities and government tax requirements on your behalf.
- Gold investments held in your SIPP could perform better than any other asset type during times of economic uncertainty or when stocks/bonds are underperforming.
- Investors can only invest in ‘Good Delivery’ bars from the London Bullion Market Association (LBMA) – all other types of gold bars and coins cannot be included in an SIPP. All types of silver are also excluded.
- There are rules and restrictions that apply to withdrawing from the SIPP.
- Given that the operative term in the phrase SIPP is “Self-Invested,” you’ll be in charge of selecting and monitoring your own investments independently. As such, investors with an SIPP need to be willing to conduct the research needed to make well-informed investment decisions on their own behalf.
- The terms of SIPPs vary greatly between trustees. In fact, some types of SIPPs can actually be more expensive than conventional pension saving methods, which is why it is always necessary to thoroughly review and compare your options before choosing a trustee/plan provider.
- It should be noted that many SIPPs are not set up to give the investor direct title of ownership over the gold stored in their SIPP. Instead, the trustee retains physical ownership of the gold. So this is an important factor to consider when comparing SIPP plan providers.
SIPPs are an ideal plan type for people who would like to diversify the their retirement pension is being stored and invested, which is why this type of plan is typically recommended to investors who already have an Individual Savings Account (ISA). However, it is important to reiterate that you’ll be responsible for making, and assuming responsibility for your own investment decisions within an SIPP.
For individuals who are fairly confident in their investment and research capabilities, SIPPs offer the advantage of gaining greater control over the way your pension is invested, which could potentially lead to greater profits and ultimately more money for retirement. With that said, you can still utilise financial guidance and assistance services if you’re interested in SIPPs but aren’t an experienced investor yourself.
Top Providers of Gold SIPPs
If you would like to learn more about Gold SIPPs or if you would like to get started right away, we recommend checking out the following providers:
– Regal Assets UK: This is our #1 recommended Gold SIPP firm due to their flawless track record in the United States. Recently established in the United Kingdom, Regal Assets has gained a solid reputation in the U.S. and has been praised by various industry experts and financial magazines. This company specializes in gold investing through retirement accounts and waives first year storage and admin fees if you meet their minimums. They also have a flat yearly fee for administration and storage of your metals, as opposed to many other companies who offer a scaling yearly fee that increases gradually. Request their free gold SIPP investment kit to learn more at www.regalassets.co.uk
– Bullion Vault: Another great choice for a Gold Pension Plan is Bullion Vault. This is a good option for tech-savvy people as they provide an online interface to trade your precious metals online. Bullion Vault is a popular firm in the UK and has been around for decaded. Learn more at www.bullionvault.com
– The Real Asset Co: Not to be confused with Regal Assets, The Real Asset Co is a relatively new player in the Gold SIPP market. Founded in 2010 by a group of young entrepreneurs, this company gives you access to a wide variety of bullion products through an online interace. You can buy/sell your metals online anytime. Learn more at www.therealasset.co.uk
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