Do You Need A SIPP?
SIPPs- Self Invested Personal Pensions
SIPPs provide a flexible pension option with the widest range of fund and investment choices.
IFAs will be able to aid in the choice of funds and investments to bring into your SIPP, and advise on the most reputable, efficient and cost-effective Sipp providers. You could go for an online provider with minimal IFA input, such as SIPP Center, Hargreaves Lansdown, Sippdeal, James Hay’s e-Sipp and Fidelity FundsNetwork. You may choose an insurance company, many of which have expanded into Sipps. Other factors include SIPP Rules, retirement from a SIPP (Income Drawdown, Annuities etc), best SIPPs for specific investments.
It would be wrong to suggest that SIPPs are the perfect solution for everyone. For example, the enormous choice of funds may prove confusing for those looking for something simple. There is also the possibility that you already have a work pension that will give you more than enough security. You also may not be comfortable with the prospect of taking control of your own pension which is the main reason why anyone invests in SIPPs.
Before taking the plunge and investing in a pension, make sure you look at all the options. Those who are unlikely to be placing large amounts of money into their pension and are not concerned with investment choice should look at stakeholder pensions. These offer little in the way of choice but their charges are small in comparison to personal pensions. There are SIPPs available that do not cost a huge amount and enable you to deal with top quality fund managers. After all, a SIPP is designed for those seeking to take control of their financial affairs.
Terms And Conditions
One common mistake that thousands of people make is to remain content with their current pension be it stakeholder or personal. There is no reason not to at least review your current arrangement and see if a SIPP would be a better idea. This is especially pertinent when you consider the relative ease with which you can transfer money to SIPPs from other pensions. Most people are happy to continually review their car insurance or mortgage but fail to do so with something as important as a pension.
It is a fact that many personal pensions are outdated and offer terms that are detrimental to a person’s retirement fund. As well as being charged fees that are ludicrously high, investors also find that their fund performs abysmally. It should be noted that certain companies will charge you fees and penalties for transferring money from their account. Make sure that the extra amount you will make from the SIPP is greater than the sum you will lose during the process of transferring.
Insurance companies are the chief provider of pension plans and have a bad track record in terms of fund performance. Although specialist companies have a better record than most insurance companies, you should never assume that a good past performance guarantees a profitable future. SIPPs also offers investors access to the funds of specialist companies and charge much lower fees than personal pensions. There are SIPPs that are on the expensive side but with a large choice of lower cost SIPPs available, smaller investors have no need to panic. For example, you may elect not to invest in property which is one of the more expensive investments available. These types of investments attract the highest fees. If you are in any doubt as to your SIPP suitability, contact a financial advisor.