7. Use of a SIPP

How does it work?

It is possible to set up a personal pension, Unsecured Income or Alternatively Secured Income plan under what is known as a Self Invested Pension Plan (SIPP). In simple terms, this route would offer you the ultimate retirement planning flexibility for the future. Self investment gives you the opportunity to invest wider afield than the chosen provider’s insured funds if you so wish, for example stocks and shares, investment trusts and investment funds offered by other providers.

Although legislation introduced early in 2001 allows clients already in pension fund withdrawal to switch to another provider, for example for reason of “under performance”, this is an exercise involving costs. Setting the original plan under a “SIPP” facility will often negate the need to consider such transfers.

The following should however be noted when considering use of the self-investment facility:

• SIPPs are not subject to regulation by the Financial Authorities. As a result, those provided by non-life Offices may not provide key features documents, illustrations of potential future benefits or offer “cancellation rights”.
• Only “Insured” investments held within a SIPP are covered by the Financial Services Compensation Scheme. This Scheme protects the policyholder generally for 100% of the first £30,000 and 90% of the next £20,000 of the value of the assets of the fund(s), in the event of insolvency of a Life Office.
• Commercial property is a popular investment under SIPPs, but purchases of such property are subject to stringent controls.

<< Back To Retirement Options Fact Sheet