Extra flexibility

2018 Guide to Self-Invested Personal Pensions: Extra Flexibility

Live comfortably in the knowledge that your lifestyle needs are covered

It is essential that you start to plan for your retirement as early as possible so that you are able to live comfortably in the knowledge that your lifestyle needs are covered. This will mean careful consideration of your pension fund throughout your working life.

Extra flexibility

With retirement planning, it is important to take into account the fact we’re all living longer. Couple that with the fact that the cost of living continues to rise and the value of the State Pension continues to dwindle, this provides a very strong case for starting to save early for your future.

For appropriate investors, one option is a Self-Invested Personal Pension (SIPP). A SIPP is a wrapper for your pension investments and gives you control of your pension, whereas most members of a company pension scheme have very little control and almost no idea where their pension money is invested.

Also, with many of the UK’s largest companies closing their final salary schemes to all members, many members now have to look at taking their pensions into their own hands.

First introduced in 1989, SIPPs have evolved into a favoured investment vehicle for individuals seeking more control and flexibility in their retirement planning. They are suitable for those people who are comfortable with making their own investment decisions about their retirement.

Extra flexibility

SIPPs can be opened by almost anyone under the age of 75 living in the UK. You can open a SIPP for yourself or for someone else, such as a
child or grandchild. Even if you’ve already retired, you can still open a SIPP and take advantage of the extra flexibility that it gives you over your pension savings in retirement – but you may be limited by how much you can pay into it.

SIPP investments

SIPPs offer a wider investment choice than most traditional pensions based on investments approved by HM Revenue & Customs (HMRC). They give you the chance to pick exactly where you want your money to go and enable you to choose and change your investments when you want, giving you control of your pension and how it is organised.

Most SIPPs allow you to select from a range of assets, including:

  • Unit trusts
  • Investment trusts
  • Government securities
  • Insurance company funds
  • Traded endowment policies
  • Some National Savings and Investment products
  • Deposit accounts with banks and building societies
  • Commercial property (such as offices, shops or factory premises)
  • Individual stocks and shares quoted on a recognised UK or overseas stock exchange
Collective investments

These aren’t all of the investment options that are available – different SIPP providers offer different investment options. Residential property can’t be held directly in a SIPP with the tax advantages that usually accompany pension investments.

But, subject to some restrictions (including on personal use), residential property can be held in a SIPP through certain types of collective investments, such as real estate investment trusts, without losing the tax advantages. Not all SIPP providers accept this type of investment though.

Time to take control of your retirement plans for the future?

To find out more about setting up Self-Invested Personal Pension, please Contact Us. We look forward to hearing from you.

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