A SIPP gives you the flexibility to choose from a range of investments for your pension but you can get a financial adviser to choose them for you instead.
SIPP stands for self-invested personal pension. A SIPP is a type of personal pension but provides the added advantage of being able to potentially invest in a more diverse range of investments.
With a SIPP you can choose the investments yourself or, alternatively, you could get a financial adviser to choose the investments on your behalf, in line with your requirements. So some SIPPs can give you much greater flexibility than standard personal pensions. And you can hold a SIPP alongside other pensions, such as workplace pensions.
SIPPs are allowed to hold a broad range of assets, including the following:
But there are variations in the assets offered by different SIPP providers, from those that provide the full range of asset types to those that simply offer particular investments funds. For example, at Schroders Personal Wealth (SPW) we offer SIPPs that contain our Personal Discretionary Service Portfolios (PDPS) and our Portfolio Funds. We believe these portfolios and funds, which invest in a range of underlying investment assets, can, where appropriate, meet the investment needs of many of us.
Pension charges can, in the long term, make a significant difference to your retirement savings. So investing in a low-cost SIPP could, if appropriate, potentially improve your investment returns.
A SIPP can also give you greater freedom to manage your pension fund to meet your changing needs. And it can offer the scope to provide greater control over how much risk you are exposed to and your pension’s potential to grow.
Even so, many people might be better off putting more into a workplace pension rather than opening up a SIPP or transferring from a workplace pension to a SIPP.
Preparing for retirement requires careful financial planning and involves making crucial decisions about pensions. A financial adviser can help you understand your pensions options and what arrangement might best suit your retirement needs. At SPW one of our principles is to have regular reviews with an adviser. This can help ensure you’re on track to reach your retirement goals.
The value of investments and the income from them can fall as well as rise and are not guaranteed. The investor might not get back their initial investment.
The retirement benefits you receive from your pension plan depend on a number of factors including the value of your plan when you decide to take your benefits which isn’t guaranteed and can go down as well as up. The benefits of your plan could fall below the amount(s) paid in.
Tax treatment depends on the individual circumstances of each client and may be subject to change in the future.
Fees and charges apply.
Any views expressed are our in-house views as at the time of publishing.
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This article is for information purposes only. It is not intended as investment advice.
