DIY Investor Magazine
/
2015 Issue
50
FROM CRADLE TO LATER LIFE
SIPPS OFFER A LIFETIME SOLUTION
Francis Moore
Chairman
European Pensions Management
Francis Moore considers the new pension regime and discusses why those seeking to take advantage
could be attracted by the flexibility and freedom provided by a SIPP
Pension Planning always raises a number of questions –
how to find the right scheme, what to invest in and how
to draw benefits. There is much to consider and making
the wrong decisions can have a life-changing impact.
For some the Self-Invested Personal Pension (SIPP) is
the answer - But what is a SIPP, how does it differ from
a personal pension and is it right for everyone?
There are between 1.1 and 1.5 million SIPPs in the UK
worth approximately £150 billion.
Their growth has been driven by their flexibility and tax
reliefs compared with other financial products such as
ISAs, savings schemes and personal pensions. Recent
pension reforms have increased interest in pensions
and some observers predict a doubling of the SIPP
market by 2020.
However, SIPPs are still dwarfed by Individual Savings
Accounts (ISAs) of which there are over 20 million with
assets combining both cash and stock/shares ISAs of
over £500 billion.*
Occupational pensions account for some £2 trillion
of assets being added to by the new auto-enrolment
schemes.**
SIPPs too are set to benefit from those in occupational
pension schemes looking for more retirement flexibility
and wider investment options previously known as
Free-Standing Additional Voluntary Contributions
(FSAVC).
Also, poor performing legacy insurance company
pensions are also increasingly being transferred to
SIPPs to consolidate fragmented smaller pensions,
reduce costs, and offer wider investment choice.
