The ‘popular’ pensions choice for consolidating pension pots

People planning for his or her retirement have been urged to take a look at establishing a SIPP as the scheme comes with a number of benefits.

Ed Monk, affiliate director, Personal Investing at Fidelity International, informed Express.co.uk: “A SIPP is a tax-efficient way to start saving for your retirement with any contribution you make boosted by the Government.

“For example, if you are a basic-rate taxpayer and save £80 into a SIPP, the government will top this up with an extra £20.

“And if you are a higher or additional rate taxpayer, this benefit can be even greater. SIPPs have a wide range of investment options which gives you plenty of choice over how your pension is invested.”

He mentioned that as SIPPs supply “flexibility and control” over an individual’s pension pot, they’re a “popular option” for contractors, sole-traders and restricted firm administrators, and people who don’t qualify for computerized enrolment.

Mr Monk mentioned it’s a easy course of to open a SIPP and this may be carried out on-line by offering some primary particulars, resembling a National Insurance quantity and the related financial institution particulars.

He added: “Contributions can be made by you, an employer or by someone else on your behalf and there is no limit on the number of SIPPs that you can have.

“You can also bring existing pensions together and consolidate into a SIPP – this is especially useful and beneficial from a money management point if you have accrued several pensions from jobs throughout your career.

“Many people do this because of the flexibility and convenience of this type of pension.”

Anna Murdock, head of Wealth Planning at JM Finn, spoke concerning the completely different belongings SIPPs will be invested in.

She mentioned: “Most SIPPs offer a wide range of underlying asset classes including, collective investment funds, exchange traded funds (ETFs), direct UK and overseas equities, UK gilts, bonds and other fixed interest securities.

“Some SIPP providers also offer options to hold commercial property, land and loans. SIPPs also offer a good deal of flexibility when it comes to retirement.

“Changes to the pension regime introduced in 2015 have meant there is a far greater degree of flexibility in how people can use their pension pot at retirement.

“Historically, most people had to purchase an annuity that would provide an income for life, but today it is possible to withdraw an income from the fund, whilst keeping the fund invested.

David Jeal, head of Pensions at CMC Invest, said a SIPP can sit alongside other pensions a person has, including one with an employer.

He said: “Just remember the annual and lifetime allowances apply to all your pensions in total. Most employers will only contribute to the workplace scheme when you do – opting-out is generally not a good idea as you could them lose out on the additional contribution your employer makes.

“Workplace schemes and some SIPPs offer ‘packaged’ investments (usually based on your attitude to risk) where they invest your money in a managed fund or a specific portfolio of funds.

“Where a SIPP really lives up to its name as being a ‘self-invested’ pension is one where you’ll have a wider range of investment options – such as mutual funds, investments trusts, UK and overseas shares, ETFs, and gilts/bonds.

“They also offer a full range of drawdown options which are currently available from age 55, which you can mix and match to suit your financial plans.”

He added: “SIPPs will be seen as a great way to handle your retirement provision. Used alongside ISAs, they might help you handle that transition from full-time work to full-time retirement in a versatile and tax-efficient approach.

“But the preliminary driver is the need to be in charge of how your pension is invested. After all, they’re ‘self -invested’ schemes, whether or not you’re actually doing it your self or being supported by a monetary
adviser.

“The development of influence investing and the need to verify your pension funds are invested consistent with your environmental or social beliefs is already seeing extra individuals utilizing a SIPP to assist them obtain this.

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