What Is A SIPP?
Written by Emma Bunting
A SIPP is a type of pension plan. A SIPP differs from a traditional pension plan as it allows you greater control as to how to invest your funds and when and how they can be taken as retirement income. How the SIPP investments are managed is up to you.
There are four ways to manage the funds. You can manage the investments yourself. If you wish to purchase shares directly you will need to appoint the services of a stockbroker who will charge you accordingly. You may wish to appoint the services of a stockbroker who will charge you accordingly. You may wish to appoint an independent financial adviser who can provide you with investment advice. You may wish to appoint an investment manager to manage your investments on a discretionary basis i.e. they conduct investment decisions without having to inform you prior to making the transaction.
You can appoint more than one investment manager or adviser if you segment your pension portfolio. Equally you may change the investment manager or financial adviser at any time.
If you appoint an investment manager or financial adviser to act as your agent, then your SIPP provider is entitled to act upon their instructions until they receive written instructions confirming that they no longer have your authority to act for you. By using an agent, you will be agreeing to ratify any decisions they make.
The SIPP cannot accept monies from Protected Rights Funds (Protected Rights Funds are monies accrued from opting out of the State Second Pension or State Earnings Related Pay Scheme).
Many SIPP providers do not act as investment managers or financial advisers - they act only on your instructions. They therefore do not accept any responsibility as to the performance of the fund, or your choice of investment manager or financial adviser.
This product is not a Stakeholder Pension. Stakeholder Pensions were introduced by the government in 2001. The aim of these pensions was to encourage people to invest for their retirement within a restricted charging structure (a maximum of 1.5% of the fund value per annum), no penalties on transfer and flexibility in terms of how often contributions can be made.
You should speak to a financial adviser if you believe that a Stakeholder Pension is more suited to your needs.
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