Guy Opperman discusses the ‘priority’ for pension trustees
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Pension options are varied and different options will suit people according to their needs and plans for retirement. But a particularly popular option comes in the form of a Self-Invested Personal Pension, or SIPP as it is commonly known. A SIPP is a kind of do-it-yourself arrangement, allowing Britons to make their own investment decisions ahead of retirement.
It is often seen as both flexible and cheap, providing individuals with autonomy as to where their money goes and how it can grow.
However, these types of arrangements can still come with charges, and it is here where Britons may be able to make some headway when it comes to money saving.
Research from consumer magazine ‘Which?’ found many individuals could save significant sums, simply by making a switch.
It looked at some of the core fees charged by SIPP providers to see the costs involved with this kind of arrangement.
Pension: Britons urged to switch as many could save £22,800 before retirement (Image: Getty)
For a £100,000 pot, annual costs range from £150 to £450.
But, of course, these can change depending on how much is being saved.
The organisation estimated that a saver starting with a £250,000 pot at age 50 could end up with £22,800 more in their pension pot by 65 by choosing the most cost-effective provider over the most expensive.
If someone has an even larger pension pot, then they may stand to benefit a greater amount.
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If someone switches to the cheapest provider with a £500,000 pot, then they could be £1,570 better off per year.
There are a number of pension providers which Britons may choose if they are going the SIPP route.
These can include Fidelity, Vanguard, AJ Bell and others, which have proved somewhat popular among pension savers.
But first, individuals will need to determine if a SIPP is the right choice for them.
Pension: Monthly sum needed for a £100k pot (Image: EXPRESS)
A SIPP is effectively a pension wrapper which can hold a person’s investments until they retire.
Once a person departs from the workforce, they can then turn this investment into income which will help them fund later life.
As a “wrapper” then, a SIPP can be an appropriate option for those hoping to draw together all of their different arrangements into one easily accessible place.
With DIY arrangements, however, there are certain important aspects to bear in mind.
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Usually, Britons will not be able to invest in offshore funds or unquoted shares with this kind of arrangement.
Nor will they be able to include property which they directly own.
This kind of pension investment does not usually come with advice from the firm it is taken out with, meaning it is best suited to those who are comfortable with going it alone.
Before making any pension decisions, however, Britons are encouraged to undertake research.
They may also wish to consult a financial adviser to gain tailored expert help on what decisions are right for them.