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Today’s post is especially for our UK followers!

If you have questions about your pension options and where an SIPP fits into the picture, fellow S&S reader, Peter, has the answers.

(For our American followers looking for retirement plan guidance, check out 3 Easy Steps to the Retirement of Your Dreams.)

What is an SIPP and How Does it Compare to Other Pensions?

Everyone worries about their pension. You likely started getting the jitters from it the moment you entered the workforce, right? After all, there have been many pension scams that have taken place that have left people financially vulnerable. It’s a tricky process, one of the few that’s hard to really nail down and get right. That said, it’s by no means impossible.

Constant worrying plagues the process; how much money will I get? Do I go for a private pension or an employer pension? Do I trust my employer? What should I invest in? These questions constantly linger when they shouldn’t, namely because they’re all easily answerable.

SIPP is an acronym for self-invested personal pension, and it can often be the answer to all these burning anxieties. But what is it, and how does it compare to other pension plans?

It Offers Complete Control

SIPP is a type of private pension that allows its users to be in complete control. The colloquially coined term for it is a DIY pension scheme, solely because the retirees put their own money into the pot themselves, as well as choose their own investments to contribute to it. Sound appealing?

Of course, clarity comes with this level of control. There’s no employer tinkering behind the scenes, or other forces influencing your pension plan. It’s all you and your effort, meaning you always have a detailed rundown of the proceedings; from overall cost to simply where your money can be found. It’s an entirely transparent and customisable process.

A Low-Cost Effort

Of course, a private pension plan can draw up expectations of high expenditure. It feels almost like a luxury service, something only the rich and powerful can grasp onto and take advantage of. However, even if your finances aren’t the best, you can get some quick and easy help and then take advantage of a SIPP plan in no time. Contrary to what many might think, SIPP plans are highly accessible and can be utilised for low-costs.

Remember, with the SIPP plan you have the reigns. Consultations and meetings with advisors; none of these are strictly necessary to enrol on a SIPP plan. Generally, you’ll need a minor sum (in pension terms) of £5000 to get the ball rolling here, and then you can cut out all the extra imbursements that come from dealing with existing investment portfolios. Its barebones service, but again, you have control here.

Investment Arena

All employer pension schemes, and some private ones for that matter, offer limited investment choices. Generally, you’re confined to a few pathways and avenues you can choose to go down – safe options that typically allow you to tread water, rather than reach land so to speak. It can feel extremely confining, especially if you’re someone who wants to live a little with the time you have left!

SIPP’s are an entirely different arena. You can invest in anything you so choose, from certain individual companies, investment trusts, shares, corporate bonds, and even commercial property. Many of these would be barred under any other pension scheme, but the SIPP makes them viable candidates for quality investment. Obviously, more investment can mean more money if done properly, which is clearly a huge draw for the SIPP.