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SIPP - Self Invested Personal Pension

 

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Put simply, a Self invested Personal Pension Plan or SIPP is a personal pension plan which provides more individual control through greater flexibility and increased investment choices. Whether you’re looking to review your existing arrangement or set up a new SIPP, we have a qualified professional SIPP advisor for you.

 

 

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How do I maximise my SIPP investment?

A specialist SIPP advisor will take the time to ensure no stone is left unturned and along with the following factors will help you to consider what’s important:

Begin by exploring your purpose in having a SIPP! For example, having access to a wider selection of investment choices through a SIPP is no good if you don’t use them.

Your number of years or term to retirement should greatly influence your investment strategy and the content of the portfolio contained within the SIPP. Your advisor can help you understand the impact of years to retirement as well as the corrosive effects of inflation.

Discuss your risk profile with your advisor before purchasing your SIPP investments. Taking a more cautious approach may require you to work a year longer while being too adventurous might mean never retiring at all.

Performance and performance reviews as with any pension remains a vital ingredient. If your SIPP underperforms you will need to either alter your investment strategy or increase contribution levels. A SIPP advisor can provide updates and recommend strategies that are designed to keep you on track.

All SIPPs receive the same favourable taxation treatment on contributions, provided you and your trustee operate within the HMRC guidelines. Failure to comply with the guidelines including investment in to unauthorised assets and can lead to significant taxation consequences.

Charges in your SIPP can be as a transaction cost (buying and selling shares), as a fixed amount, a percentage of the asset value or both. Take time to explore the charges with your advisor who will be able to pinpoint the best charging structure for you

Choosing your Trustees can take time because every trustee operates slightly differently. Their rigidity or flexibility will influence your SIPP’s ability to invest more widely into areas like private equity or individual share purchase. Specialist SIPP advisors will have a practical working knowledge and will often be on first name terms with trustees.

 

The Cost of good SIPP advice:

Good SIPP advice and paying for it should really be viewed as a worthwhile investment that keeps you on track with your retirement planning goals. There is a cost of not taking advice and who knows what that disaster fund could amount to as well as a cost for advice which will be disclosed to you by your SIPP advisor.

The best SIPP advisors will save you more than they would even cost over the term to retirement when combining improved investment performance and reduced costs.

You are really investing in a professional who will tell you directly the way it is, pointing out in good times that you can have a contribution holiday and conversely telling you to put more money in when performance is lacking.

Take the next step with your SIPP enquiry today and let us introduce you to a suitably qualified advisor – complete our form today

 

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Beginners Tips Regarding SIPPs
February 15th, 2011 | Your SIPP

SIPP guideHow Much Is Enough?
Unfortunately, we cannot give you a definitive answer because of people’s differing circumstances. One often used piece of advice for those looking to retire at 65 entails saving a percentage of your annual earnings that is equal to half your age when you elected to start saving for your pension. For example, if you begin saving at 30, save 15% of your earnings. Should it be you start at age 44, you should save 22% of your annual wage. It is up to you whether you want to save via regular payments or one single lump sum per annum. Always make sure that this percentage never changes, regardless of whether your income increases or decreases. There are dozens of useful online pension calculators which can also help you with the decision.

65 is not the standard retirement age any longer with more emphasis placed on the length of time one will be retired. Rising life expectancy means that you will have to be wary when deciding on a definite savings amount which will allow you to live comfortably in retirement. If you are 45 and want to retire at 65, you are in the same boat as a 40 year old looking to retire at 60. However, as the 40 year old would have a longer retirement, he/she would have to save at a greater rate or hope that his/her investments grow more rapidly. He/she would also receive lower annuity and would be ineligible for a state pension for several years. It is also worth noting that the state pension age is set to increase to 66 first before reaching 68 in future.

How To Invest
It is easy to make pension contributions and relax in the false knowledge that you have done enough. The fact of the matter is, insurance companies handle your investment fund and often do a poor job with relatively little in the way of positive performance.

The more diverse your portfolio, the better. SIPPs offer you hundreds of options including futures, shares, property as well as cash. The more you spread out your investments, the less likely you are to be stung by a market crash and the more likely it is that your other choices will make up for any loss suffered by less lucrative choices. You could trust in a managed fund as they all claim to diversify the portfolios of pension investors but it is hard to find one company that is adept in all areas. With SIPPs you get to choose several different fund managers, each a specialist in a field.

Investors who are more than a decade from retirement should be looking towards equity-based choices. It is best to stick to UK equities for the most part with smaller investments in the US, Japan and strong European countries. If you have a large pension you may be interested in more expensive commercial property. Use the freedom offered to you by a SIPP to invest as safely or as riskily as you wish.

Those who are almost at retirement age need to avoid volatile markets like the plague. If your pension is to be claimed in annuities, be sure to look at cash and fixed interest options. Slowly eliminate all other choices as retirement age creeps up. Keep a close eye on the markets as you do this. When they have hit their peak, leave equities behind and transfer the money into fixed interest.

How To Begin
When you are just beginning to contribute to a SIPP you should be aiming for income producing investments. Equity income funds are one of the best places to start for anyone who has many years left until retirement. It is also possible to continue investing in equity income funds while you withdraw some of your pension. The aforementioned fixed interest investments are a safe way to play the market once retirement age looms. There is also the option of investing in specialist areas and growing markets though these investments are usually considered to be the most risky.

If you haven't found all the answers that you are looking for you can find similar content in the Your SIPP sections, contact an adviser at the top of the page, or you could try these related posts:

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