SIPPS Suck

[Fred Bloggs]

Another thing to bear in mind is that different SIPP providers may or may not allow different types of products within their SIPP. For example, some may not allow you to hold physical gold within the SIPP.

There are many variations on this theme. The more common, low cost SIPPs, offered by the likes of HL, BestInvest, SIPPDeal, Alliance Trust Savings etc.... are really aimed at those who want a wrapper to hold unit trusts, shares, bonds etc... If you want to hold commercial property and other rather more specialised investments then you need to look for the more expensive, rather more bespoke SIPP solutions. I'm guessing for most of us here, a low cost plain vanilla SIPP is all that is required.

[ratewhore]

Another thing to bear in mind is that different SIPP providers may or may not allow different types of products within their SIPP. For example, some may not allow you to hold physical gold within the SIPP.

[imightbewrong]

using a pension avoids corp-tax if you are extracting from a company, so you get a 20% boost on day one.

[Fred Bloggs]

I believe you no longer have to buy an annuity.

Correct.

[youngguy]

I wouldn't invest in a pension!

They are too restrictive and having to buy an annuity is not what I want, yes there are some tax advantages but I believe that these will not outweigh the major disadvantages.

Annuity rates have been slashed in the past few years and I believe that over the next 20 -30 years they will fall like a stone as a result of increased life expectancy.

I fully use my ISA allowance each year plus top this up with other investments.

I believe you no longer have to buy an annuity.

[Waldorf]

I wouldn't invest in a pension!

They are too restrictive and having to buy an annuity is not what I want, yes there are some tax advantages but I believe that these will not outweigh the major disadvantages.

Annuity rates have been slashed in the past few years and I believe that over the next 20 -30 years they will fall like a stone as a result of increased life expectancy.

I fully use my ISA allowance each year plus top this up with other investments.

[youngguy]

Thanks All

Very valid points and I am also investigating personal pensions.

ASB - Thanks for your viewpoint. This has definately given me something to think about

[ASB]

So, to answer your question, SIPP's simply are not for you by the exact definiton of what they are.

That's perhaps a little harsh. Once the OP has decided what his investment strategy is to be it could potentially still be worthwhile buying the underlying in a SIPP. This could potentially produce a more cost effective route.

A load of people for example will simply invest in a UK tracker (or a mix of various trackers) through a "standard" pension provider. And then forget about it.

It can be the case that this can be achieved more cheaply though a sipp by virtue of commission rebates, cheaper products or similar (e.g. some full replication ETFs are much more cost effective than a lot of funds even after commission rebates).

Yes, it is self invested, but that doesn't actually force active management - though if buy and hold is to be ones strategy it is probably a good idea to be comfortable with whatever one is planning to hold long term.

Of course it also depends on the sipp providers charges which may be the right route.

[brianmcc]

I say: if someone offered you £50,000 to spend a week or two reading about pensions, investing, and compound interest would you accept?

If you're young you can very easily improve your pension pot by that amount by making a few informed but simple choices while you're at the start of your career.

Compared to IT, pensions aren't that hard, honestly.

I highly recommend the Motley Fool books. Like most things in life, what appears complex is only that way through lack of a simple explanatoin, and the Fool books can provide that.

[jmo21]

I've had a SIPP for 2 years now.

I took a large position in a volatile fund without understanding enough about it, and I'm trying to rebalance my SIPP.

Overall, I am +6%. The volatile fund I mention is currently sitting at +9% so I haven't currently lost out on it, but I do want to reduce my position in it - it had dropped negative at one point a few months back.

So, to answer your question, SIPP's simply are not for you by the exact definiton of what they are.

[rsingh]

the big seller seems to be along the line of "take control of your investment". This is exactly what I don't want to do! I'm in IT, not finance!

Then you are kind of missing the point of them. Self Invested Personal Pension Schemes are probably not for you. Try a regular pension scheme.

[youngguy]

to be more accurate my understanding of them sucks.

I've been researching pensions for a few weeks and now understand the basics (I think). Based upon views here I have also been looking at Sippdeal and Hargreaves Lansdown.

They certainly seem quite reasonable in terms of costs (rather than the 1-4% charges from others), but upon reading the websites the big seller seems to be along the line of "take control of your investment". This is exactly what I don't want to do! I'm in IT, not finance!

So my question is, how much effort does it take all of you to:-
understand what you should be doing in terms of choosing funds
monitoring them
changing them

I do like the idea of some control and whilst I am happy to do research I don't ever think I'll be savvy enough to confidently make decisions with 100s of K of my money in an economic environment.

Thanks in advance