Self Invested Pensions (commonly known as ‘SIPPs’) have become increasingly popular personal pension options in recent years. The main reason for this that these innovative schemes provide investors with unrivalled versatility, freedom and choice.
Versatility
These versatile schemes give investors the opportunity to decide what they want to invest their pensions in, or if they feel they don’t know enough about investments, they can arrange for a financial planning specialist to make their investment decisions on their behalf. Indeed, all a SIPP investor needs to do is appoint a trustee to keep an eye on the pension’s performance – as long as they do this, they can basically manage their investment all by themselves.
Freedom
Under rules which came into force in April 2006, investors now have far greater freedoms when investing their money in a SIPP. In fact, they can make contributions up to 100 per cent of their earnings with full tax relief on the total (subject to a maximum earnings limit). This replaces the less generous (and more convoluted) earnings-related allowances that were previously available.
Choice
A comprehensive SIPP can accommodate a wide range of investments under its umbrella, including shares, bonds, cash, commercial property, hedge funds and private equity. However, investors do need to bear in mind that they will most likely have to pay higher chargers to enjoy a wider level of choice.
Without doubt, few personal pension options can match the versatility, freedom and choice which SIPP investments afford.
