SIPP's or Self Invested Personal Pensions allow
individuals to make their own trading decisions from a range of
investment types including futures, CFD's and foreign exchange
trading through a range of SIPP Brokers.
SIPP's have been around since April 2006 and unlike conventional
personal pensions where the pension provider controls the assets
the individual can take control of their retirement plan in terms
of how savings are invested and benefits paid.
Trading futures, CFD's or foreign exchange products through a
SIPP allows individuals to receive tax savings associated with this
product whilst taking advantage of the opportunities when trading
these leveraged products.
Contributions and Tax Laws
Contributions to SIPPs are treated identically to contributions
to personal pension funds although are limited to a maximum of
£235,000 in any one tax year. The provider of the SIPP will claim a
tax refund at the standard rate on behalf of the customer although
higher rate tax payers are required to claim higher rate relief
through an annual tax return.
Once the SIPP holder reaches early retirement age (55 years old)
they are eligible to take a pension from some or all of their
accrued fund; up to 25% as a tax free lump sum with up to 7% of the
remaining fund taken annually as taxed income from a DrawDown.
Growth of the SIPP is free from Capital Gains Tax.
SIPP trading is not as popular as it was in the latter part of
the last decade but it still has appeal, especially when markets
become volatile and individuals look to take more control over
their own investments. There are a number of SIPP providers in the
UK and a few brokers that will deal directly with these
SIPP providers to allow access to different types of investment
products including futures, CFD's and forex.
Tip: After the market crash in 2008 many brokers
withdrew their SIPP accounts due to problems with
internal risk management. Even though the risk systems have
improved not all brokers provide SIPP accounts and
so your choices will be limited compared to trading with a standard