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.

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.

The difference is that SIPPs are basically subject to the same rules as personal pensions. They have the same limits on contributions, the same 25% restriction on the tax-free lump sum on retirement and the same restrictions on how you can take your money once you’ve retired. For detailed advice about the SIPP tax benefits, go to http://sippadvice.co.uk

You are permitted to contract out of State Second Pension (S2P) if you’re using a self invested pension for your pension but the rebate you receive in its place doesn’t actually go into your SIPP. Instead it goes into a type of personal pension called an Appropriate Personal Pension.

Overall, a SIPP / self invested pension is an ideal way to save for your retirement. As always, do you research and find a SIPP provider with low charges and enough flexibility to meet your current and future needs are, as usual, the key things to consider.

For more information about a SIPP or self invested pension, go to SIPP Advice.