As pension holders have become disillusioned with the performance of their existing personal pension plans SIPP pensions have become increasingly popular. Sophisticated investors find it very restricting to be tied in to a pension company’s limited selection of investment funds, and find the flexibility of the SIPP investment an attractive proposition.
With SIPP pensions you can keep control of the investment decision-making process yourself or you can work with an independent financial adviser to help you choose the SIPP investments.
The main disadvantage of SIPP pensions is ironically, what makes the SIPP pension attractive for pension holders, ie that they are responsible for the investment decision making. Unlike personal pensions where the investment potential is limited to the pension providers internal funds, SIPPs can invest in a wide range of investments including direct investments into stocks and shares and commercial property.
SIPPs can also be used as company pensions, these are called group SIPPs and unlike stakeholder pensions where investment choice is limited these group SIPPs can be used to purchase commercial property. Many people now use SIPPs to do pension release, this is where tax free cash is taken from a pension often after a pension transfer has been made.