SIPP Gold Investment Guide – Maximise Your Pension

Various pension options currently exist in the UK for individual savers. These include work scheme pensions, stakeholder pensions, and a Self Invested Personal Pension (SIPP).If you’re considering adding real gold bars to your retirement plan, then the only permitted route is via a SIPP.

Gold Bullion of a certain minimum purity was granted an approved asset status for SIPPs more than a decade ago, opening up pensions as a new type of gold investment. Despite this, not all SIPP companies will accept gold if their main focus is electronic share and fund ownership. While gold is a qualifying asset, it’s not compulsory for all SIPP administrators to accept it.

If you already have a SIPP, you’ll need to check with them if they permit gold bullion purchases. If you don’t have a SIPP, or your current provider doesn’t accept bullion, then you’ll need to set up a new one which does. Gold bullion dealers who offer pension gold products will be able to recommend options.

The benefit of investing within a SIPP is that you can still add a full range of traditional asset classes such as shares, bonds and managed funds, to sit alongside your gold bars.

Gold is a separate asset class on its own and can be a very valuable part of your SIPP. But why is this? How do you add gold to your SIPP and how does it benefit your pension savings?

Firstly, the reason many people have gold in their SIPP is to provide a ‘hedge’ against the other elements of their pension. Gold isn’t linked to the price of traded shares, so for example, if the markets go down, it doesn’t necessarily mean the price of gold will also fall. In fact, historically, gold has tended to rise in recession.

This can help your SIPP maintain its value due to this balance. Having a diversified SIPP like this can mean that, overall, your SIPP retains its value, or at least is protected because of this diversification, if the markets were to fall.

In this way, gold can provide security and protection to your SIPP, where otherwise it might be viewed as being exposed to market crashes, regardless of which shares or funds it’s invested in.

When comparing gold to traditional UK pension options like NEST or defined benefit plans, the volatility and return profiles show some key differences. Over the past several decades, gold prices have experienced fewer dramatic swings than stocks and bonds. And gold has maintained its purchasing power far better than currencies like the British pound, which has lost significant value to inflation over time.

According to industry analysis, gold significantly outperformed key stock market indices like the FTSE 100 over the past decade when priced in British pounds sterling. While past performance does not guarantee future results, this highlights gold’s potential to preserve wealth compared to riskier assets.

Gold can also help shield your pension assets from currency depreciation, as it maintains a relatively steady value regardless of the pound’s strength. This applies globally as well, potentially diversifying geographic risk for internationally invested pension portfolios. With concerns over a weakening pound and its impact on imports like energy, gold offers a bastion of stability.

For UK pension holders interested in diversifying with gold, the primary methods are through Self-Invested Personal Pensions (SIPPs) and Small Self-Administered Schemes (SSAS). The process involves finding an appropriate pension administrator who offers gold as an asset choice within their SIPP or SSAS plan.

Some of the steps for adding physical gold bullion to your SIPP include:

• Research the right bullion dealer for you. [link into our piece Tips For Evaluating Gold Dealers] Physical Gold is one of the popular choices for UK pensioners and can recommend a suitable SIPP provider.
• Contact the SIPP provider to arrange setting up a new SIPP.
• Once set up, transfer funds from existing pension accounts into the SIPP/SSAS.
• Discuss with the gold dealer, which size and quantity of London Bullion Market Association (LBMA) accredited gold bars are most suitable.
• Complete required gold dealer purchase order and anti-money laundering checks. Send this purchase order to the pension administrator.
• The SIPP provider will transfer the requested funds to the gold dealer to purchase the agreed gold bars
• The dealer will safely store the gold at a certified depository like our partner Loomis, where we can store your gold for an additional fee.

It’s critical to be aware of HMRC rules regarding all the requirements to gain tax advantages for the gold held in your UK pension. Consulting a financial advisor can help navigate the specifics.

Once physical gold bullion is acquired within a SIPP or SSAS, ongoing management is required to protect its value over time as part of your pension investment portfolio. This involves selecting the right gold assets, minimising fees, employing risk management strategies, and working with advisors when needed.

When choosing physical gold bars for your pension, your dealer will be able to discuss the price and flexibility variations between different size bars. The general rule of thumb is that larger gold bars can be bought at a lower price per gram than small gold bars. Buying a higher quantity of bars will provide a discount over smaller amounts. Smaller bar denominations will provide more flexibility to be able to sell more modest amounts of gold. Be aware that gold coins are NOT permitted into a UK pension.

It’s also essential to research the various pension fees and seek the lowest management, annual and transaction fees within your pension administrator. Some charge percentage fees, while others offer fixed rate plans.

Proper insurance for the gold bullion is also crucial to get coverage against theft and damage. Gold dealers will usually include insurance as part of their overall storage charges. Secure storage at a reputable depository protects against accessibility issues and ensures a chain of custody if the gold needs to be sold.

While self-management is possible, working with qualified financial advisors and wealth managers provides professional oversight for your pension gold. Their industry expertise and monitoring can help you optimise your holdings as part of overall retirement planning.

To maximise gold’s benefits for your UK pension over time, it’s wise to keep an eye on emerging trends and economic factors that may influence its value and role. For example, digital gold offerings through blockchain technology could provide easier access and account management compared to physical storage. And shifts in global currency reserves held by governments and central banks can impact broader supply and demand dynamics.

Ongoing education is also key. Resources like industry analysis reports, advisor newsletters, and gold-focused publications can provide context on gold’s place within modern pension planning. As with any long-term investment, awareness and understanding are vital for ensuring your retirement portfolio remains optimised and protected over decades.

In summary, integrating physical gold bullion into your SIPP or SSAS provides a way to diversify your UK pension strategy for greater security. With prudent management guided by qualified advice, pension gold can potentially deliver stability, risk mitigation, and maintained purchasing power to your retirement savings for years to come.

Can I move my pension into gold?

Yes, it is possible to move part of your pension into gold, specifically through vehicles like Self-Invested Personal Pensions (SIPPs) and Small Self-Administered Schemes (SSAS) in the UK. This involves working with a gold dealer and pension administrator that allows gold bullion investment options.

Is it good to invest in gold for retirement?

Investing part of your retirement portfolio in physical gold bullion can provide benefits such as diversification, risk management during market downturns, and potential long-term stability of value. Many financial advisors recommend keeping a small percentage of overall pension assets in gold.

How much gold do I need to retire?

The appropriate gold allocation depends on factors like your current retirement savings, risk tolerance, desired retirement lifestyle, and age. Most experts suggest keeping 5-15% of your total pension portfolio in physical gold, but your specific needs should be evaluated.

What does a gold-plated pension mean?

A “gold-plated pension” refers to guaranteed, defined retirement benefits rather than investing pension funds directly into gold. It is a term for lucrative pensions, not related to actual gold ownership.

Can I buy gold in my pension UK?

Yes, buying physical gold bullion bars is allowed within UK pensions like Self-Invested Personal Pensions (SIPPs) and Small Self-Administered Schemes (SSAS), following regulations set by HMRC. Gold coins are not permitted.

Can I cash out all my pension?

You can cash out an entire pension but normally face tax penalties for accessing pensions before age 55. There are exceptions like serious ill health. Seek regulated financial advice before cashing out pensions.