When it comes to retirement in the UK, you’ve actually got quite a few different choices as to how you’d like to use the money you’re earning or have earned and stockpiled throughout your working life. Most people will choose to do the same thing, but that doesn’t have to be what you do, and changes over recent years have been put in place to allow people to take more control over their money and how it’s used in later life. The SIPP, which stands for Self-Invested Personal Pension, is one such way of having more control, and here we’re going to look at the advantages it offers over your standard pension.
What is a SIPP?
A SIPP essentially means that you as the investor gets to decide how your money is invested in any and all of the approved investment products. Not only do you chose what to invest in, you also choose when to buy in, and when to sell. This really is something for those who want to know they’ve driven their own retirement portfolio, or those that believe the traditional route has so far not provided them with the returns that they’re looking for.
The SIPP provider is the company that handles everything for you, and helps you along the way. Any decisions you make are done with their approval too, so it’s not as though you have to make decisions alone and without the input of professionals. However, there are always going to be inherent risks, so it’s generally recommended that you have at least some knowledge of the way investment products work before you choose to go down this route. Those with no prior experience may find things difficult. You can of course use an investment management firm if you want the best combination of control and strategy.
The final thing that we should touch on, that has changed recently, is cost. Personal pensions used to be seen as cheaper options than a SIPP (in terms of provider fees and such), which dictated the market quite a lot, but they’ve become a lot more competitive in the last few years, meaning they’re more and more the choice for discerning investors.
In conclusion, if you think that your own investment abilities might be better for you than a traditional pension plan, then a SIPP could be the right choice. There are a lot of investment options to choose from, and it can make planning for retirement that bit more interesting.