What you need to know about SIPPs

There is never a bad time to plan for the future, and SIPPs can help give you control over your financial path.

10:47 23 January 2014

Pensions can be a little complicated to figure out. There are different options and plans, but the one offered by your employer might not be the one that is right for you. This is the reason for the introduction of the SIPP (Self-Invested Personal Pension). The SIPP allows you to select your own investments from all of the options approved by HM Revenue and Customs. Here is what you should know about SIPPs:

• SIPPs have the same tax breaks as traditional pensions.

 

• Pensions are more beneficial than ISAs in some respects because you are allowed to withdraw a certain amount from a SIPP when you turn 55.

 

• SIPPs are an excellent choice for people who like to be more involved with their pensions and the types of investments being made.

 

• Some SIPPs are simpler than others, for those who are unfamiliar with investments.

 

• Many companies allow you to manage your investments over the internet or via telephone.

There are other things to consider with SIPPs as well. Review SIPPs offered by different providers. You may find out that some are lower cost than others, or that certain companies offer more assistance with making investment choices than other companies.

Costs vary depending on the company and the type of SIPP you choose, but comparisons can help you ensure that you receive the plan that suits your needs and your chequebook.  Also be sure to ask about any applicable fees and the scenarios that could incur fees.

You may not be able to change the company once you have chosen your SIPP provider, so it is essential to be certain you have the right one for you before you open an account. Remember that some plans may have annual fees, fees for the number of times you change your investments, and potentially maintenance fees.