Fortunately, the Self-Invested Personal Pension (SIPP) emerged from the Autumn Budget today (November 26) largely intact.
There have already been rumors that the 25% tax-free lump sum may be at risk. But the most significant announcements concerned inheritance tax on unspent pension pots. So for investors who want to build a sizeable pot for later, the path is still open.
Here I will look at how someone who starts today with 5k. pounds in SIPP, could receive an attractive sum.
Snowball effect
For simplicity, let’s assume that this investor is a basic rate taxpayer. Their £5,000 contribution is matched by HMRC to £6,250. And if they contributed another £100 each month, the tax relief would turn this amount into £125 (or £1,500 a year).
Considering this is a retirement account where the investing runway will likely take decades, I don’t think it makes sense to take too much risk and swing between the fences. Therefore, in my opinion, an average annual return of 8% is a realistic target.
However, these modest numbers can quietly turn into something surprisingly significant. After 35 years, the SIPP will enhance to around £360,360, excluding platform fees.
At this point the investor can choose to charge 5% per annum, which is equivalent to £18,900 (or £1,575 per month). And while inflation will naturally reduce purchasing power over 35 years, it still highlights just how valuable a SIPP can be for long-term investors.
Please note that tax treatment depends on each client’s individual situation and may change in the future. The content of this article is for informational purposes only. It is not intended to be and does not constitute any form of tax advice.
Stocks with great growth
So whenever I can, I add change to my own SIPP, taking advantage of tax breaks. One stock that I have bought several times over the last year is stock Now Holdings (NYSE:NOW).
It has increased by 65% since the beginning of the year.
So what does Nu Holdings do? Well, this is the holding company of Nubank, which is the leading digital bank in Latin America (and currently one of the largest fintech platforms in the world).
In the third quarter, Nu reported that its customer base had increased to 127 million. But the amazing thing is that it still only works in three countries – Brazil, Mexico and Colombia.
| Customers (Q3 2025) | Year-on-year growth | |
|---|---|---|
| Brazil | 110.1 m | +11.5% |
| Mexico | 13.1 m | +47.2% |
| Colombia | 3.8 m | +90% |
| Total | 127 m | +15.8% |
In Brazil, an astonishing 60% of the adult population are Nu customers. However, in Mexico and Colombia the population penetration rate is still low. Only 14% and 10% respectively.
This highlights the growth potential in these two countries, let alone around the world (Nu has ambitious global expansion plans).
On the financial side, third-quarter revenue rose 39% to a record $4.2 billion, while net income also rose 39% to $783 million. Adjusted net income was $829 million. This shows how Nu becomes very profitable as it scales.
Total deposits reached $38.8 billion, up 34%, and the loan book grew 42% to $30.4 billion. While this is very encouraging, it would be naive to assume that Latin America is Switzerland. Inflation, currency risk and political instability are risks.
On the other hand, tens of millions of Latin American consumers are gaining access to financial services for the first time. Traditional banks have not been customer-friendly (high fees, indigent customer service, etc.), which makes Nu’s seamless digital banking a much better proposition.
Given its long growth trajectory and excellent profitability and management team, I think this stock is worth considering. I think in the long run this will continue to do business in my SIPP.
