What Is A SIPPs Pension?

A SIPP is a Self-Invested Pension Plan, a scheme that was introduced by the government to give people more flexibility with their pension planning.

SIPPs pension schemes have several benefits over traditional pension schemes, but also come with an element of risk. For that reason, anyone considering setting up a SIPPs pension scheme should consult an independent pensions adviser, so that they are fully aware of the pros and cons of committing to a SIPPs scheme.

A SIPPs pension scheme allows you to manage your own fund. You have complete control over the investments your fund makes and of the contributions that are paid into it. Although the scheme is held by an administrator, you can manage the investment yourself or you can appoint someone to manage it for you. The services offered by the administrator are the key to the amount of flexibility you can have over your scheme, and the amount it costs you to run it.

How Do I Control My SIPPs Pension Investment?

In order to make the most of your SIPPs pension, you should have access to a range of funds. You can move from fund to fund, so it may be best for you to have access to something called a Fund Supermarket. Even if you don't want to buy funds when you initially set up your SIPPs pension, you may want to in the future, so it's worth having this option available. Funds in a Fund Supermarket often have lower administration costs than funds from other sources. You can control your investment yourself, or you can appoint a manager to do it for you.

What Can I Invest My SIPPs Pension In?

At the moment, you can only invest your SIPPs pension in defined funds, but from April 6 2006 , you will be able to hold property, excluding your own home, in your SIPPs pension. This makes it more flexible, and more available to the general public, who are increasingly looking towards the property market to provide income and capital for their retirement. You can buy property with your pension fund and you can receive rent into your pension fund, but it must all be done at the market rate; therefore if you buy a house, and then sell it to your pension fund, it must be at open market price and similarly, if you then rent the house to family or friends, you must also ensure that you are charging a fair market price.

Can I Transfer My Company Pension Into A SIPPs Pension?

It is possible to transfer your existing company pension into a SIPPs pension, but you need to take independent pensions advice before you do so. Company pension plans may make a significant charge for this type of transfer, and you have to be prepared to give up some of the corporate benefits in return for greater flexibility and choice.