Should I Have a SIPP?

A SIPP (Self Invested Personal Pension) is one of several types of pension provision in which a person can invest – but it is crucially different from most other forms of pension in that it is the purchaser of the pension who controls the investments held by the pension fund.

SIPPs have all the normal tax benefits attaching to pension investments generally and are governed by the same rules relating to contributions. It is in the choice of investments that the SIPP differs from a conventional pension.

A personal pension or stakeholder pension will invest in a fund managed by, or on behalf of, the insurer. These funds may hold a variety of investments, including cash, but the actual investments held will be decided upon by the fund managers.

In a SIPP, the policyholder can decide to invest in specific shares, unit trusts or even less mainstream investments such as traded endowment plans, commercial properties and so on.

Accordingly, the SIPP gives much greater investment freedom. For the experienced investor wishing to control their pension investments, or for someone with a particular investment in mind which they want to be held in a pension fund, a SIPP may well be worth consideration.