A SIPP is simply a 'do-it-yourself pension'. You choose what investments to go for and where to put your savings. You can often do this with minimum effort with many websites existing where you can manage it all online, in a similar way to an online banking portal.
You may also want to consider a SIPP as a way to gather all of your pensions in one pot as you near retirement. This also gives you the option to keep your investments into your retirement; drawing income from it, as and when you need it.
What Can I Invest In?
SIPPs give you a far greater freedom when choosing your investments compared to traditional pensions. The list of investment opportunities are plentiful:
- Stocks and Shares
- Stock exchange listed Investment trusts
- Gilts and bonds
- UK government bonds and foreign bonds
- Open ended investment companies (if recognised by the FCA)
- Bank deposit accounts (including non-sterling)
- Commercial property
- Offshore funds
- Exchange traded funds on London or European stock exchange
- Stock exchange listed real estate investment trusts
Who are SIPPs for?
SIPPs are for anyone really, assuming that you want to take charge of your retirement funds. Greater pension freedoms since 2015 have made it much easier for everyone to get onboard to manage their own pension fund.
They're not as expensive as you might think, with some SIPPs starting from as little as £50 per month. You can also top up your fund with lump sums, although this is capped at £40,000 a year.
If any of the following principles apply to you, you might be a prime candidate for a SIPP:
- People looking to take control of their own pension, and comfortable with making decisions on a wide range of investments
- Those making significant pension contributions, or those with a large pot already
- People who have a financial advisor making decisions on their behalf
- Those looking to consolidate their pension into one place
- People who want to keep some money invested after retirement, whilst being able to draw an income if needed
For a more in-depth look at SIPPS, please refer to our guide 'Further Guide to Self Invested Personal Pensions (SIPP)'