Hybrid SIPP: Combining the Best of Both Worlds?

Hybrid SIPPs blend the simplicity of a platform SIPP with the wider investment choices of a Full SIPP, catering to investors who desire both ease of use and extensive investment options. This duality offers a unique balance of flexibility and accessibility.
  • Last Updated: 22 Mar 2024
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Francis Hui
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Key Takeaways
  • A Hybrid SIPP (Self-Invested Personal Pension) is a retirement savings plan combining the features of traditional and flexible SIPPs, allowing investors to manage part of their investments while a fund manager oversees the rest.
  • Pensioners could benefit as it provides a balance of control and expert management, potentially leading to enhanced retirement income.
  • The risks involved include increased fees due to professional management and potential losses if the market falls or your chosen investments perform poorly.
  • To invest you’ll need to select a SIPP provider, open an account, and then choose a mix of self-managed and professionally managed investments.
  • You can combine equity release with a Hybrid SIPP in the UK to potentially increase your retirement income, but you should carefully consider the implications as it could affect your tax situation and state benefits.

The Hybrid SIPP is the middle ground between your typical personal pension and a self-invested personal pension.

It’s scary to think that one in five Britons over 35 and one in six over 55 don’t have any form of pension savings,1 so something like a Hybrid SIPP could be an option to look at.

In This Article, You Will Discover:

    Navigating the world of pensions can be daunting, but that’s why Every Investor is here. 

    As an authoritative source of financial information, we’ll guide you through the ins and outs of a Hybrid SIPP.

    What Is a Hybrid SIPP and How Does It Work in the UK?

    A Hybrid Self-Invested Personal Pension (SIPP) is a unique blend of traditional SIPP and Small Self-Administered Scheme (SSAS) available in the UK.

    It harnesses the flexibility of a SIPP and the company-centric benefits of a SSAS, providing pension savers with a broader range of investment choices, including commercial properties and facilitating loans to sponsoring employers.

    This type of SIPP operates by allowing the member to control their investment strategy, but also to offer benefits to their business.

    It offers greater control over tax planning, with tax-free growth on investments and the ability for the pension fund to borrow money.

    It’s an excellent solution for business owners and directors who want to fully utilise their pensions for both personal and business benefits.

    Benefits of a Hybrid SIPP

    This hybrid pension offers a compelling blend of security and flexibility. 

    The insured funds provide a safety net, offering stable growth and minimal risk. 

    Simultaneously, the self-invested portion empowers you with greater control and the potential for higher returns, contingent on your investment choices.

    Risks of a Hybrid SIPP

    The risks are the same as any financial product where market volatility and poor choices can result in investments losing value.

    How Does a Hybrid SIPP Differ from Other Types of SIPP?

    A Hybrid SIPP differs from other types of SIPPs primarily in terms of investment options, flexibility, and costs.

    Let’s take a closer look: 

    • Full SIPP – offers the widest range of investment options, including direct property purchases and unquoted shares, but with higher charges. In contrast, a Hybrid SIPP limits the scope for other investments but often reduces the charges.
    • Low-cost SIPP – provides access to a range of funds at a lower cost. A hybrid SIPP may not be as cheap as a low-cost SIPP, but it offers a blend of insured and self-invested options, creating a balance between cost, security, and flexibility.
    • Platform SIPP – typically offers a wide range of investment options but does not support more exotic investments like direct property or unquoted shares. While a Hybrid SIPP also offers diverse investment options, it mandates investment in the provider’s insured funds.
    • Robo SIPP – uses algorithms to manage investments based on your risk profile and goals, offering little to no human intervention. A Hybrid SIPP, on the other hand, allows for more control over investments, with the ability to manually manage the self-invested portion of the pension.

    Would a Hybrid SIPP Be Suitable for Me?

    If your are looking for a blend of security and control over your pension investments, this type of pension may be a good choice. 

    It’s best suited to those who are comfortable with some level of investment risk, but also appreciate the stability offered by insured pension funds.

    How to Set Up a Hybrid SIPP

    Setting up a Hybrid SIPP usually involves contacting a pension provider, completing an application, and deciding on the split between insured funds and self-invested assets. 

    Seeking professional financial advice is always a good idea when making investment decisions.

    Choosing the Right Hybrid SIPP

    The right pension for you depends on your risk tolerance, investment knowledge, and retirement goals. 

    Consider factors such as the provider’s reputation, the range of investments offered, fees, and the level of customer service.

    Which Providers Offer Hybrid SIPPs?

    These SIPPs are more often offered by insurance companies than traditional SIPP providers.

    Research thoroughly and compare offerings before choosing a provider.

    What Are the Alternatives to a Hybrid SIPP?

    Alternatives to such pensions include other types of SIPPs, stakeholder pensions, and personal pensions. 

    Each has its advantages and disadvantages, depending on your circumstances and retirement goals.

    Common Questions

    What’s the Difference Between a Traditional SIPP and a Hybrid SIPP?

    Are There Any Limitations to Investing in a Hybrid SIPP?

    Can I Transfer My Existing Pension Into a Hybrid SIPP?

    How Much Control Do I Have Over My Investments in a Hybrid SIPP?

    What Are the Tax Implications of a Hybrid SIPP?

    What Is a Hybrid SIPP and How Does It Work?

    How Can a Hybrid SIPP Benefit a Pensioner?

    What Are the Risks Involved with Hybrid SIPP?

    How to Invest in a Hybrid SIPP in the UK?

    In Conclusion

    A Hybrid SIPP offers a unique pension solution that combines the security of insured pension funds with the flexibility of self-invested assets. 

    This middle-ground approach presents an intriguing proposition for those willing to balance potential high returns with a safety net of lower-risk insured funds. 

    Despite its inherent risks, this type of pension could be an excellent choice for those comfortable with a certain level of investment risk and desiring greater control over their retirement funds. 

    Like any pension plan, however, it’s critical to seek professional financial advice to fully understand and effectively navigate the tax implications and other complexities associated with a Hybrid SIPP.

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