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May
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A SIPP (Self Invested Personal Pension) gives you more choice and control over where you can invest your money.
While most traditional pensions limit where you can invest to a small list of funds, normally run by the pension company’s own fund managers, a SIPP allows you to invest pretty much where you like.
You can choose from thousands of funds run by top managers including Artemis, Fidelity, Invesco Perpetual, Jupiter and Schroder, as well as pick individual stocks and shares, bonds, gilts, investment trusts and exchange traded funds.
A SIPP offers many investment advantages over traditional pensions such as flexibility, diversification potential and sheer investment choice. They are not restricted to the limited fund range offered within an ordinary personal pension or stakeholder pension. A SIPP investor can choose from, and switch between, a vast choice of unit trusts, investment trusts and Open Ended investment Companies (OEICs), from across the market. You can therefore create a rich, diverse investment portfolio with these possibilities.
It is also possible to invest in individual quoted shares, bonds, gilts and many other types of investment such as commercial property but there will be more expense attached to this. The allowance of direct investment in stocks and shares means that a discretionary fund manager can run a portfolio of shares and/or collective investments for you within your SIPP.
The benefits of a SIPP
Due to the investment flexibility of a SIPP, you won’t have to change your contract if you want to switch investments e.g. increasing or decreasing your funds to a higher or lower risk. In terms of tax benefits, investment limits and retirement options, a SIPP works exactly the same as any other personal or stakeholder pension.
Traditional pension plans tend to offer a narrow choice of funds managed only by the pension provider and no option is given to use funds managed by other fund managers. They can also carry hefty charges, particularly on older plans. One possible drawback of using a single fund manager is while they may have expertise in one particular area, they are unlikely to have the best record across all fund sectors. One fund manager may offer a good Property fund, while another may be renowned for its expertise in picking US shares