Personal Financial Services
There are two types of SIPP contract available in the marketplace:
These are offered by insurers, can be accessed for similar sized contributions to a personal pension, and are becoming increasingly popular. In addition to their own insured range of funds (typically 200 to 500 funds) they usually also offer access to the full range of self investment options including fund supermarkets, commercial property and Discretionary Fund Management. They also offer the full range of retirement options under the contract.
The primary benefit of this type of contract is that you only pay for the options that you use so can switch to the more expensive self investment options as and when required.
You could therefore initially invest in the lower cost Insured fund range until such time as your fund had grown to sufficient value to warrant utilising the other wider investment options available without having to transfer to a new plan. These types of plans can therefore cater for an individual's entire pension requirements throughout their lifetime under a single contract.
However the additional charges incurred for some of the more bespoke investment options can make these plans more expensive than utilising a full range SIPP below.
They are therefore appropriate for investors with smaller initial investment sums but who are expecting to build up a substantial fund over their lifetime and are likely to require the self investment options and flexibility at retirement in the future.
These will provide you with access to the full range of investment options available under a pension contract and methods by which you can take your benefits at retirement.
As a result of this greater flexibility the ongoing administrative costs are higher for the SIPP provider and this is usually reflected in the annual wrapper costs. However the charges under this type of plan are usually set at a pound cost (e.g. £300) rather than a percentage (e.g. 0.35%) which is more cost effective the larger your fund value is. Growing competition in this market is also driving down these wrapper costs.
That said these still remain most appropriate for investors with fund values in excess of £100,000 or those wishing to immediately utilise the more bespoke investment options available such as Commercial Property purchase or Discretionary Fund Management.
For more information or advice on SIPP's, please contact us or request a call back.
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