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Why Transfer To A SIPP


With SIPP You Take Control Of Your Pension

Some providers offer a more restricted choice. Some SIPPs offer the choice of commercial property. They tend to be expensive. Low cost SIPPs tend to exclude commercial property. Remember that investments should be held for the long term as they do fall as well as rise in value. This means you could get back less than you invested. As you approach retirement you should normally reduce exposure to volatile and riskier investments in preparation for securing your retirement income.

SIPPs aren’t for everyone. Some investors do not require a huge a large choice of investments, others may have adequate pension provision through their employer. Flexibility and broad investment choice are particular attractions for those taking responsibility and control of their pension.

If starting a personal pension look at all the options. If investment choice and flexibility are not important to you, and your contributions are going to be low, then a stakeholder pension could be a cheaper and better option than a SIPP. If you want access to the best fund managers in the market a low‐cost SIPP may be a better choice. If you want to invest directly in commercial property or more exotic investments these are normally offered by the more expensive SIPPs. With a SIPP you should have the desire and confidence to take control and make investment decisions.

If you already have a personal or stakeholder pension you should in any case regularly review your arrangements, although few people do.

Many old personal pension arrangements have cripplingly high fees. They often suffer poor fund performance. However before transferring, you should ensure that you will benefit from doing so, and check that you will not incur any excessive penalties or lose any guarantees or other benefits.

"Transferring to a SIPP is not difficult. People regularly change their car insurer or mortgage provider, few however take the trouble to re‐examine their pension"

Most pension plans are provided by insurance companies, which generally do not have the best record for investment performance. There are exceptions. Investment funds run by specialist companies have historically performed better, although past performance is not a guide to the future.

If you wish to escape from mediocre fund performance, and take control of your pension arrangements, SIPPs offer access to the funds of specialist investment companies. And if charges are blighting your pension fund you could try a low cost SIPP.

Certain SIPPs, such as those offering investment in commercial property, are expensive but low‐cost SIPPs can represent excellent value depending on the size of the fund and the investments chosen. Low cost SIPPs may not include investments such as commercial property.

If you have any doubts about the suitability of a SIPP for your circumstances you should seek advice from a qualified advisor.

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