SIPPs - Self Invested Personal Pensions

When you're saving for your retirement, there are several different types of pensions available, giving you greater freedom to choose the plan best suited to you. One option that's becoming increasingly popular with those who desire greater flexibility from their retirement funds is SIPPs - Self Invested Personal Pensions.



SIPPs are unlike standard pensions, and can have numerous advantages over traditional saving methods - though conversely, they can also bring a higher level of risk, especially if you are inexperienced in financial markets. The key aspect of SIPPs that makes them stand out compared to standard pensions is that you are in complete control over your finances, and able to decide how much to save or invest to grow your nest egg at the rate you desire.



The investments you can make with your SIPP will mostly come from a range of funds, which can be bought when you first set up your pension or further down the line. There are places you can find funds at lower administration costs than elsewhere, such as dedicated fund supermarkets, however there are increasingly more options available for SIPP investors beyond investment funds too - including the option to hold property, gilts and bonds, gold bullion and traded endowments in your investment portfolio.

That doesn't mean you need to be a financial expert to open a SIPP though, as you can also hire an administrator to manage some of your activity on your behalf - though you should be aware that this will cost more than managing the pension yourself. You should always consult with a pensions adviser before making any big decisions however, as you need to ensure you preserve your future financial security. The same goes when choosing to transfer your existing company pension funds into a SIPP, as some companies may impose substantial charges for such a transfer.



If you are unhappy with your current pension and looking for higher returns, a SIPP could be the ideal solution - however, you should be aware that there can sometimes be high charges applicable, particularly when holding non-standard investments such as gold bullion. If you are planning on investing large amounts, your SIPP will usually work out more cost-effective. The type of investments you make can also have significant benefits - particularly holding commercial property, such as your business premises, as you may be able to avoid paying capital gains tax when the property is sold, and can offset the rental income you pay as an expense of your business.



The author of this article is a part of a digital blogging team who work with brands like Standard Life. The content contained in this article is for information purposes only and should not be used to make any financial decisions.