If you’re interested in having more control over your pension savings, you may wish to consider a Self-Invested Personal Pension, or SIPP. A SIPP is sometimes referred to as a ‘do it yourself’ pension, because it allows you to choose which investments you put your savings into, and you can manage your savings conveniently online. You can also easily see how much money you currently have in your pension pot, and where it is invested. SIPPs are a great option for those who prefer to have a single pension fund before they retire and those who are interested in keeping their money invested after they retire, so that income can be drawn down from it.
SIPPs and Investment
If you opt for a Self-Invested Personal Pension, you will be able to invest in stocks and shares, trusts listed on any stock exchange, commercial property, gilts and bonds, and offshore funds. You will also be permitted to put your money into open ended investment companies, as long as they are recognised by the Financial Conduct Authority, and bank deposit accounts including non-Sterling accounts. Investing in UK government bonds and bonds issued by foreign governments is another option for those with a SIPP.
Is a SIPP Right For Me?
Self-Invested Personal Pensions are most suitable for people who are comfortable making their own investment decisions. You should have a strong financial background or a good working knowledge of investments if you plan to navigate a SIPP alone. It’s also possible to get the most out of a SIPP by employing the services of a financial advisor. Some wealth management services like James Hay Partnership specialise in Self-Invested Personal Pensions. SIPPs are most useful for those with a larger pension pot and people who plan to make significant pension contributions over the years.
Types of SIPP Available
Full SIPPs offer the widest choice of investment, but they also come with the highest charges. You should only consider a full SIPP if you have a large pension fund, as the average sum invested in this type of plan is between £150,000 and £450,000. The low cost SIPP will still offer you a wide range of investment options, but this doesn’t include offshore funds, unquoted shares and direct ownership of property. Hybrid or insurance SIPPs are offered by insurance companies, and you usually have to pay a substantial amount into the company’s own funds before being able to choose your own assets. If you’re in a financial positon to choose the full SIPP, it is usually a better choice than the hybrid or insurance option as it allows you to have control over your investment from the start.
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