Are self-invested personal pensions (Sipps) the future of retirement savings? Last week, Fidelity launched its own Sipp, joining a growing band of insurers, stockbrokers and independent financial advisers (IFAs). Sipps offer greater choice and more control over your pensions investments. They can also work out cheaper than traditional schemes.
Some Sipps give you access to more than 1,000 funds through a fund supermarket and will usually let you invest in quoted shares, says Paul Farrow in The Sunday Telegraph.
Firms that offer this type of Sipp include Hargreaves Lansdown, Sippdeal, Alliance Trust and Killik & Co. These supermarket Sipps do not usually charge a set-up fee, so you pay only the fund charges, which are typically 1.5%-2% a year. Sharedealing charges vary.
A full Sipp offers the most flexibility and is more suited to wealthy or sophisticated investors. It will include investment in commercial property, insured funds, traded endowments and derivatives.
You could put some exotic funds into your Sipp, says Ellen Kelleher in FT Money, such as Avarae’s Global Coins Fund, the Vintage Wine Fund, or the Fine Art Fund. Companies offering full Sipps include James Hay, Pointon York Sipp Solutions and AJ Bell. There is generally a one-off set-up cost of £300-£500 and an annual charge of £400-£600.
Or you could opt for an online Sipp, which is ideal for those who have other retirement savings and wish to choose their own investments. But this is an execution-only service, where you make the decisions about when to buy and sell.