Potential Clients Tend To Dismiss SIPP
I see this quite often at my company. Potential clients who come to our office are looking for a quick solution for their pension plan. And it’s often in this haste, that they completely overlook SIPP when it’s advised to them. Mostly because they are unable to comprehend the difference between a traditional pension plan and SIPP. Or maybe because they want their plan to be on ‘auto-pilot’ when they retire so that they don’t have to worry about their finances.
However, in my opinion, this is one plan which they must consider. A SIPP is nothing but just a type of pension plan. It differs from a conventional pension plan as it allows greater control over how and where to invest your money & when and how they can be taken as retirement income. The SIPP funds management is completely dependent upon the client. Traditionally, there are 4 ways in which the funds can be handled.
These funds can be invested in stocks or equities via a stockbroker. Or one may employ the services of an independent financial adviser or an investment manager. These entities will then act as SIPP providers who will have complete authority to invest your funds. However, by acting as a SIPP provider, they do not accept any responsibility of the performance of your investments.
In the end, it always is a personal decision. Some people like to opt for the Stakeholder Pension (introduced in 2001). These pensions were introduced to promote retirement investments. There is a restricted charging structure in stakeholder pensions (a maximum of 1.5% of the fund value per annum). Also, there are no penalties on transfer and flexibility in terms of how often contributions can be made. Because of all these provisions, some people consider it a ‘safer’ option, and hence opt for these instead of SIPP.
Filed under: Credit, Finance, Financial Planning, Funds, Investing, Personal Finance, Taxes
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