Should I Choose a SIPP?

by Andy Hough on August 2, 2012

If you’re looking to improve your retirement fund, self-invested personal pensions (SIPPs) are a great choice. They offer both flexibility and a range of investments to really help you secure your financial future.

So, should you choose one? Here we’ve got a rundown of the reasons why it just may work for you.

Tax relief

A SIPP gains tax relief in the same way as other pensions. This means that when you pay money into it, you can gain basic tax relief of 20%. For example, if you were to pay £80 into your pension, the value will be boosted to £100 before costs. This is the case for all the money you earn through your investments within your SIPP. High earners can also be provided with higher tax relief when they complete their tax returns.

Range of investments

SIPP pensions from UK providers offer a vast range of investment options enabling you to build up a substantial portfolio with the potential for very high returns. Choosing a provider that offers a broad range of investments, you’ll be able to grow your retirement pot by investing in unit trusts, investment trusts, Open Ended Investment Companies (OEICs), securities quoted on a recognised stock exchange, government bonds, corporate bonds, warrants, exchange traded funds (EFTs) and exchange traded commodities (amongst others).

The chance to make the important decisions yourself

In order for a SIPP to be legal it has to be administered by an authorised provider in order to gain tax relief from HM Revenue & Customs. The decision on what you buy and sell within your SIPP is purely down to you. Whilst for some this may appear a daunting prospect, for the investment savvy it’s the ideal option to really grow your retirement nest egg. If this sounds like an option that may interest you, you may want to seek the advice of an independent financial adviser (IFA) to see which option would suit you best.

So, will it suit me?

If you’re the kind of person who wants to take full responsibly in how your retirement savings are grown, then a SIPP could well be the perfect option for you. If you want to leave the control more in the hands of a third party, it may be wise to look into other options such as a stakeholder pension.

Setting one up

If this sounds like you, and you can’t wait to get going and planning for your retirement future, there’s never been a better time than now to set up a SIPP.

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