Would it be prudent for me to move this personal pension fund to a SIPP provider at this late stage of my life, or would the set up costs etc and drawdown fees be punitive?
I would like to consolidate the workplace retirement saver and personal pension fund together and manage it myself. Hi Den Good question and there is quite a bit for you to consider. I will summarise things to think about below: As you are still working Your employer has to pay into your workplace pension if you remain in the pension scheme.
If you decide to consolidate the workplace retirement saver into your personal pension or a new SIPP, you are likely to lose the benefit of your employer pension contributions. However, you may be able to consolidate the personal pension into the workplace retirement saver pension without losing your employer contributions. Your current company pension contributions are very tax efficient, as you benefit from having contributions before any income tax and national insurance deductions are made on your monthly salary, so I would be careful about losing this benefit if you decide to consolidate to a new SIPP.
Do you plan to access your pension savings before you retire? This is something to consider if you decide to consolidate the personal pension into your workplace retirement saver.
Workplace pensions do not always allow you to partially draw on them while you are still contributing, and this is occasionally a reason to have a pension separate to a workplace pension once you are at retirement age. It is worth considering why you are looking at a SIPP, instead of your personal pension. The main difference between a SIPP and a personal pension Calculator Redundancy pay calculator.
Self-invested personal pensions. How are SIPPs different? Are SIPPs right for you? What is a SIPP? For more information on personal pensions, see our guide Personal pensions. Need more information on pensions? Our help is impartial and free to use, whether that's online or over the phone. Back to top. SIPPs can offer much wider investment options than other pension types.
The wider investment options can allow you to invest in a wide range of assets, including: company shares UK and overseas collective investments — such as open-ended investment companies OEICs and unit trusts investment trusts property and land — but not most residential property.
Not all SIPP providers accept this type of investment and restrictions on personal use apply. For more information on how you can invest in your pension, see our guide Pension investment options. SIPP pension rules.
You control how much you save and how often. To help you plan out how much to save, use our Pension calculator. The rates of tax relief for Scottish residents are slightly different. Find out more in our guide Tax relief and your pension. You can often change your contributions online or by completing a form.
Is a SIPP a registered pension scheme? Yes, SIPPs have been registered pensions since Does saving into a sipp affect my lifetime allowance?
SIPPs affect your lifetime allowance in the same as other defined contribution pensions. Find out more in our guide Lifetime allowance for pension savings. Fees and charges. Fees might include: set-up charges ongoing charges figures for the investments platform or service charges to cover the administration of your pension annual administration charges some providers combine the investment and administration charges dealing fees for investing — with some fees fixed and others percentage-based, depending on the provider.
For more information on charges, see our guide Pension scheme charges. Find out more in our guide Shopping around for pension income products at retirement. What are my options for taking money from a SIPP? The most suitable option for you will depend on your age and personal circumstances.
Your main options are: Keep your pension savings where they are — and take them later. Use your pension pot to buy a guaranteed income for life or for a fixed term. This is also known as a lifetime or fixed term annuity. Use your pension pot to give you a flexible retirement income. This is also known as pension drawdown. You can then use the rest to give you a regular taxable income. Take a number of lump sums. The rest is taxable. Take your pension pot in one go.
Mix your options — choose any combination of the above, using different parts of your pot or separate pots. You can find out more detail on all your options in our guide Options for using your defined contribution pension pot. Got questions about your options for taking money out of your pension?
They can also help you choose one and manage the SIPP funds. Find out more in our guide Choosing a financial adviser. When you decide that a pension is right for you, you can:.
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Are they better? Many people are under the impression that a SIPP would provide better returns than a personal pension, but how true is that? A SIPP is a type of personal pension that offers more investment options. This and the way they charge are the two main differences between them.
There is also a third consideration which is whether your employer would be willing or able to contribute to your SIPP, as not all SIPPs would allow employer contributions. From an investment perspective, most modern personal pensions offer a wide range of investment funds to choose from and this should be adequate for most people.
Some workplace stakeholder pensions however, do have a narrower range of funds available than personal pensions. This is primarily to ensure that they remain cheap and accessible for inexperienced investors who would typically need to join quickly without the need for financial advice. The more experienced investor who wanted more control over their finances may find that the SIPP would be the better option.
The SIPP investor would be able to use their SIPP to invest in individual shares, investment trusts, gold bullion and commercial property amongst other qualifying assets. Having these investments under the roof of a SIPP would shelter any investment gains from tax. This would be an added cost and one would need to weigh up the cost benefit of that. Charges imposed on SIPP investments tend to be higher that those of personal pensions, however some SIPPs charge a fixed annual fee as opposed to a percentage of your pot, which could be beneficial for those with larger pots.
What would happen if your personal pension or SIPP company went bust? This is an important differentiator and one worth checking before you took the plunge one way or another. The more experienced investor looking to invest in interesting or esoteric assets such as commercial property, individual shares and commodities such as gold and silver may prefer the SIPP route.
Anyone who simply wanted to plan for their retirement in as simple a way as possible may be better off with a personal pension. The worst case and sadly quite common is the investor who liked the sound of a SIPP and bought one, paying for the privilege without using any of the many options available. Please read our Privacy Statement before completing any enquiry form or before sending an email to us. Facebook-f Linkedin-in Envelope. Group 3. Is a SIPP better than a personal pension?
News Categories. Contact us today. Request a call back. Contact Sterling and Law. Send Your Message. The more experienced investor looking to invest in assets such as commercial property, individual shares and commodities such as gold and silver may prefer the SIPP route. Article by Akwasi Duodu. Investment options From an investment perspective, most modern personal pensions offer a wide range of investment funds to choose from and this should be adequate for most people.
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