Taking control of your pension investments
Tax-efficient wrappers provide a wide variety of options
Many of us depend on our pension for our future security and financial well-being. After our homes, a pension is likely to be our largest single amount of invested capital. As the population as a whole is living longer and has more elaborate plans for retirement than ever before, ensuring you achieve the right level of income in retirement is vital.
Self-invested personal pensions (SIPP) are an ideal way for individuals to control their own pension investments. The flexibility and investment choice provided by these schemes has made them an increasingly popular choice.
A SIPP is a tax-efficient wrapper in which you can select your own investments from a wide variety of options. Rather than investing in one of a limited range of funds, you can spread your money across a whole range of different types of investments of your choice. The types of investments you are able to invest in will be subject to both HM Revenue & Customs (HMRC) and any limits set by the SIPP policy.
You are in control of your pension investments at all times. Depending on your personal objectives and needs, you can change or add new investments whenever you like. Please be aware, however, that it may take longer to realise the value of some assets than others.
SIPPs offer the same tax benefits as other personal pension plans. Personal contributions into a SIPP receive income tax relief, and the investments within a SIPP are able to grow free of capital gains tax. In some circumstances the value of the fund can be passed on to your beneficiaries free from inheritance tax, provided no benefits have been drawn.
By having a range of different investments you can spread your risk, rather than holding ‘all your eggs in one basket.’ You can invest in a wide range of investments permitted by HMRC. The SIPP wrapper is separate from the contents and as such, has distinct, often fixed charges.
Today we accumulate a number of pensions over our working life. Transferring all your pension arrangements into a SIPP means that you can have one company carrying out your pension administration, and could if appropriate to your situation reduce both the reporting and paperwork.
A SIPP allows you to choose from the full range of options at retirement, from purchasing an annuity to taking a managed income withdrawal from your fund.
