Here are several different types of retirement savings plans that you may wish to choose to help you plan for retirement:
The simplest pensions, these are designed to encourage lower earners to save for their future and are subject to restrictions on charging, meaning they can be a cheap and efficient way to start saving.
Because of the cost limits, the range of investments might be restricted, as may some of the additional options, but you will usually find index tracker-type funds and multi-asset managed funds that will suit most people’s basic needs.
These pensions offer access to a range of different funds and may have additional benefits that will make them easier for you to manage if you are looking for something on top of a basic managed or tracker fund, or to switch around different types of investment. They are not subject to the same charging restrictions as stakeholder pensions, so the fund choice can be wider and they should suit most pension requirements for most people.
Self-Invested Personal Pensions (SIPPs)
These are the most sophisticated personal pensions and allow a huge amount of investment flexibility if you are very active in your investment allocation or adventurous in your choice. SIPPs allow investors to access funds, shares, bonds, gilts, property and cash – and occasionally some more complex investments as well. They therefore allow you to build a portfolio specifically tailored to your needs and make adjustments to that portfolio whenever and however you like.
As a result, compared with the other choices above, SIPPs have been relatively expensive. In some cases, however, charges have reduced and a new generation of ‘low-cost’ SIPPS have emerged, which offer the same switching and management flexibility but without quite the same access to the more esoteric investments.
However, as with any product in any industry, you pay for the bells and whistles. Therefore, if you do not need them or do not have either the time or experience to take proper advantage of them, then paying for such a product could be a waste of your money.
As ever, if you are in doubt about anything, you should seek professional advice. Call us on 01554 770022 should you want advice on retirement planning.