SIPPS Guide: Self-invested personal pensions are a great way for wealthier savers to build their pension. SIPPs give investors the freedom to run their own fund if they wish, tax free. SIPPS are not for all investors. ISAs may be a better bet for many. This guide looks at how to select and buy SIPPS and runs a comparison between SIPPs and ISAs. We name low cost SIPPs providers and also look at where to get quality SIPPs advice. We also look at how to protect your investment from the latest SIPP tax raid from the chancellor. The aim is to help you chose and invest in the best SIPP possible.

WHAT IS A SIPP?

Sipps, like ISAs, are not an investment. They are simply a tax wrapper or envelope to hold your pension investments. But the beauty of Sipps is the huge range of investments which are eligible to be held in a Sipp, the wide choice of managers or mixture of investment managers you can appoint to manage your money, and the ability to switch investments without penalty.

SIPPs SALES BOOM

Sales of self-invested personal pensions (Sipps) are booming with £4.1 billion invested during 2006. There were four times as many new Sipps started between July and September alone last year than were sold in the whole of 2004. Some 47,000 regular premium Sipps were started during 2006 and 46,000 single premium investments were made according to the Association of British Insurers.

The entry of Standard Life into the market has boosted sales dramatically and other high profile fund managers like Fidelity, Jupiter, Legal & General who have launched Sipps in the past two years have raised awareness of Sipps.
Standard Life, for example, saw a 50% increase in life and pensions business in 2006, much of it generated by new Sipp business where assets under management leapt by £3 billion to £4.3 billion with the average Sipp worth £169,000.

WHO SHOULD BUY SIPPS?

Some think that Sipps are in fact being oversold and promoted to individuals who would be better off with a conventional pension – or even ISAs. Neil Shillito, executive director of fee-based adviser SG Wealth Management, said: 'Sipps are complete overkill for many people. Too complex, too expensive – a sledgehammer to crack a nut. The industry wants to oversell Sipps because it creates a chance to grab previously-saved pension holdings by transferring them unnecessarily into a new Sipp product. The obvious question is, to whose benefit?’