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A Guide to Self-Invested Personal Pensions

by Mike

This is a guest post.

SIPPs are an increasingly popular form of pension amongst the population in the UK and they can be an excellent arrangement for the right person although they are not right for everyone. In essence, a SIPP is just a more flexible form of personal pension, the main benefit being that you can hold a wider range of assets than a standard personal pension. A SIPP can be seen as the equivalent of a supermarket in the pension world; you can buy cash, funds, stocks and even commercial property.

Another benefit of a SIPP is that it is able to provide Income Drawdown rather than annuity purchase which, given current annuity rates, is a popular choice for those who have at least £100,000+in their pension funds.

Most people with smaller funds will not have the desire or need for this degree of choice, and with SIPP fees generally higher than personal pension charges, they are probably better off with a simpler personal pension.

As SIPP providers are generally just offering a pension administration service, the only two comparative factors are cost and service. It is a cost driven market and so many providers charge similar fees; an initial charge of £500 and an annual charge of the same amount is not uncommon. Some financial advisers who also carry out investment management services will provide a fee-free SIPP to clients whose assets are managed by the firm.

As final salary and company pension schemes are becoming increasingly rare, employees in the UK will start to accrue greater and greater private pension funds and therefore the market for SIPPs is likely to blossom over the next decade.

A company with the right experience will understand the options available to you and can help you achieve your overall financial goals.

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