When considering pension options, you may want to take things a little more into your own hands. There are many different options for saving for a pension but one of the ones which gives you the most control, is a Self-invested Personal Pension or a SIPP. Could this pension be right for you? Let’s have a look at what they entail.

Explaining the SIPP

Unlike a standard pension which is handled by other parties, you are in full control of the SIPP at all times. It is often referred to as the “DIY pension” for this reason. You can invest when and where you want to.

There are two types of SIPP; the low-cost SIPP and the full SIPP. The first is the most popular of the two. You will work with a company to build up the portfolio of investments but you receive no help from them. Everything is in your control but you have less access to what you can invest in.

A full cost SIPP is really only for those who already have a large pension fund since a minimum of £150,000 is usually invested in this scheme. However, it can be extremely lucrative if managed correctly.

What Can You Invest in?

There are many avenues of investment for people who are thinking about getting involved with a SIPP. You can choose to get involved with various stocks and shares and any of the investment trusts listed on the stock exchange. You could also trade bonds offered by both the UK government and foreign governments. If you are investing in a full cost SIPP then you also have access to investments in commercial property and overseas bank accounts.

As you can see, there are many ways you can choose to invest when it comes to a SIPP. You can choose what you want to invest in for yourself or you can rely on the advice of a fund manager or financial advisor.

Things to Watch Out For

Unfortunately, SIPPs are not risk-free. You need to carefully choose the platform or institution you are going to invest in. Since your fund manager is nothing but a channel for your investment money to pass through, the money itself is quite safe. However, there is always a chance that the investment could be lost or mis-sold. If you think your SIPP has been affected by the latter, there are legal proceedings you can undertake and you might be able to make a claim for a mis sold SIPP.

However, the most common mistake that tends to be made is to pay for more than you actually need. Think carefully about how much you are truly wanting to invest to work out if a SIPP is truly for you. They tend to work best for those who are already seasoned investors. If you have a healthy history of successful investments, you might want to consider opening a SIPP for your retirement. It could prove to be an excellent boost to your existing pension framework.