SIPPs are not the answer for all pensions, but they can be very worthwhile for those with a suitable amount to invest, sufficient investment knowledge and a full understanding of all the issues involved.
London, UK (PRWEB UK) 20 November 2012
With many investors in the United Kingdom likely to have heard of or considered a SIPP pension and have asked the common question ‘What is a SIPP?’, iNVEZZ felt it pertinent to take an objective look at the facts around SIPP investments. The investors’ portal has published an analysis by Farquar McIntosh who takes a closer look at Self-Invested Personal Pensions (SIPPs) and where they fit into the overall pension landscape. Taking into consideration both their advantages and disadvantages, the author of the editorial gives a detailed definition of the SIPP pension model and explains its increasing attraction to those seeking greater control over their personal pension.
McIntosh summarises the main types of pension available in the United Kingdom: the state pension, final salary pension and personal pension. The fairly common state pension is provided to all those eligible, subject to payment of sufficient National Insurance contributions. Also known as ‘defined benefit’ schemes, final salary pensions, on the other hand, guarantee an ongoing percentage of the last salary received before retirement. The third type of UK pension option, are commonly referred to as ‘money purchase’ or ‘defined contribution’ schemes. Personal pensions include schemes run by employers where both employer and employee contribute, and can be considered as investment policies, designed to provide an income after retirement. Self-invested personal pensions fall into this third category amongst two other variations of personal pension – stakeholder pension and ‘standard’ personal pension plans.
Following this very important note, the author of the iNVEZZ editorial, compares the SIPP to its two peers in order to distinguish its characteristics and outline its respective advantages and disadvantages. The result of his detailed comparison which the portal’s visitors can examine along with McIntosh’s other analytical points, concludes that there are no longer any real differences between the various types of personal pension when it comes to providing income at retirement. Yet the author underlines that there is a big difference when making contributions. Here, the major advantage of a SIPP pension is its high level of flexibility, and the control that the investor has over exactly how the pension pot is invested.
In addition to the detailed comparison of the types of personal pension schemes, McIntosh looks into the different investment products under the SIPP umbrella. Depending on their ‘grades’, charges and the range of investment types and funds that are permitted, there are two main subcategories of self-invested pensions – ‘full’ and ‘supermarket’. They both have their unique specifics and are attractive to different types of investors. McIntosh also takes a look at the drawbacks of SIPP pensions and the type of investor or saver that they are probably not suitable for.
iNVEZZ’s analysis of self-investment personal pensions also sounds a note of caution in regards to the choice of SIPP provider. McIntosh also remarks that SIPPs are not the answer for all pensions, but they can be very worthwhile for those with a suitable amount to invest, sufficient investment knowledge and a full understanding of all the issues involved.
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