This article may contain references to products or services from one or more of our advertisers or partners. We may receive compensation when you click on links to those products or services. Nonetheless, our opinions are our own.
A self-invested personal pension (SIPP) allows you to build up a pot of money for when you retire by making investments.
You can withdraw the money in your SIPP after turning 55 (rising to 57 in 2028), with the first 25% of the pot being tax-free. For example, if you have a pension pot worth £200,000, you could withdraw £50,000 tax-free as your Pension Commencement Lump Sum.
SIPPs are similar to a standard personal pension. However, the UK government created SIPPs to allow people to take complete control of their pension pot with a broader choice of investments. This means that SIPPs are generally more suitable for those who understand financial markets and are prepared to spend time managing their investments.
This article will explore three unique investment options for those trying to build the pot in their SIPP.
NS&I Bonds
Some SIPP schemes allow you to invest in National Savings and Investments (NS&I) products, known as ‘permitted investments’. These include:
- Guaranteed Growth Bonds: You will have a guaranteed interest rate for a fixed term of 2 to 5 years, which is added to your savings. However, you cannot take your investment or savings out until the Bond reaches the end of its term.
- Guaranteed Income Bonds: You will have a guaranteed interest rate for a fixed term of 2 to 5 years, which is paid out each month. However, you can only take your investment money out once the Bond reaches the end of its term.
- Income Bonds: You do not have a fixed interest rate, but you can access the money when you want without being subject to a notice period or penalty.
NS&I is backed by HM Treasury, so the security of your investment is guaranteed. This means NS&I Bonds are considered very low-risk investments and offer an option for more cautious investors.
Commercial Property
You can invest in commercial property such as offices, industrial units, hotels, and shops through SIPP schemes. There are three ways to do this:
- Buy a property: You can directly buy a commercial property if you have the right amount of money in your SIPP, or you can borrow up to 50% of the net value of your pot from a bank or building society as a commercial mortgage. With open banking, this would soon become even easier to do.
- Transfer a property: If you already own a property, you can transfer ownership into your SIPP. However, this means the rental income and increase in value will go into your SIPP pot.
- Invest in a property fund: You can also invest in commercial property without owning or buying a property. This fund works by pooling money from multiple investors to buy and sell properties under the instruction of an investment manager.
However, commercial property investments have additional complexities and often require financial advice. In addition, commercial property can be illiquid and difficult to sell.
It’s important to note that you are usually not allowed to invest in residential property such as houses, apartments, and villas.
Land
You are also able to invest in agricultural land. However, there are rules about the type of land you can invest in through a SIPP scheme, including:
- The land must produce income: The land must produce income, and a formal lease must be in place.
- The land must have access to a public highway: The land must have access to a public road in order to preserve its resale value on the open market.
- The land must have no residential usage: As mentioned above, you usually can’t invest in residential property, so land purchased also can’t have any element of residential usage.
- The land must not be at risk of contamination: Land near industrial sites will be considered at risk of contamination and will require environmental tests to satisfy HMRC requirements before the purchase can be completed. This increases costs and could delay the purchase.
Are You Ready To Build Your SIPP?
Before making any financial decisions, you must understand that all SIPP investments can rise or fall in value. So, SIPP investors must fully understand their investment decisions and be able to manage them, as it’s possible to get back less than you pay in.
If you’re still unsure what investment option is best for your SIPP, you should seek advice from a financial advisor.
Reviewed and edited by Albert Fang.
See a typo or want to suggest an edit/revision to the content? Use the comment form below for feedback.
At FangWallet, we value editorial integrity and open collaboration in curating quality content for readers to enjoy. Much appreciated for the assist.
Did you like our article and find it insightful? We encourage sharing the article link with family and friends to benefit as well – better yet, sharing on social media. Thank you for the support! 🍉
Article Title: What Investments Can I Use to Build My SIPP?
https://fangwallet.com/2025/01/10/what-investments-can-i-use-to-build-my-sipp/The FangWallet Promise
FangWallet is an editorially independent resource – founded on breaking down challenging financial concepts for anyone to understand since 2014. While we adhere to editorial integrity, note that this post may contain references to products from our partners.
The FangWallet promise is always to have your best interest in mind and be transparent and honest about the financial picture.
Become an Insider
Editorial Disclaimer: The editorial content on this page is not provided by any of the companies mentioned. The opinions expressed here are the author’s alone.
The content of this website is for informational purposes only and does not represent investment advice, or an offer or solicitation to buy or sell any security, investment, or product. Investors are encouraged to do their own due diligence, and, if necessary, consult professional advising before making any investment decisions. Investing involves a high degree of risk, and financial losses may occur including the potential loss of principal.
Advertiser Disclosure: This article may contain references to products or services from one or more of our advertisers or partners. We may receive compensation when you click on links to those products or services.
Source: What Investments Can I Use to Build My SIPP? – FangWallet
