ScottishStocks explains: “What means SIPPs and why they will be further attractive?
SIPPs are nothing else but Self Invested Personal Pension Schemes (SIPPs).
The freedom to invest in diverse variety of assets and possibility to manage your own retirement savings over time are the two main advantages of Self Invested Personal Pension Schemes (SIPPs). These two simple characteristics allow SIPPs to be always attractive for investors.
Self-Invested Personal Pension Schemes are relatively new matter for pension planing theory, regulation and even as investment opportunity. They have been first presented in 1989 and stencilled then with the meaning of pension schemes for the rich people. This common name has been created due to the high risk associated with these schemes.
Novadays, the high demand on SIPPs and their qualification as a preferred investment tool for pension show the significant changes in investors’ behaviour and taste for risk.
SIPPs are tools that offer to investors higher flexibility where their pension savings are invested. Any UK resident (or anyone who plans to reside in UK for not less than five years) and who is over the age of 18 has the right to invest in SIPPs.
Why Self Invested Personal Pension Schemes are different than the other schemes?
- They allow the investor to invest in such instruments, like shares (international and local), commercial and individual property, government securities, insurance trusts, insurance company funds, bank society deposit accounts and even in exotic investments.
- Usually, the first warning to investors in SIPPs is that they should understand that growth is not guaranteed. Although, the rule for the direct proportion between the higher risk and higher earnings leads some investors to choose SIPP and no other schemes.
- People choosing SIPPs want to control and manage their own investment choices.
Apart from all aforementioned risks it is good to mention that SIPPs are object of strict financial regulation and investors’ protection. The initiation, marketing and management of SIPPs are under supervision of the Financial Conduct Authority. They are also subject of regulation by The Pensions Regulator.
Furthermore, in case of failure of the SIPPs operator, investors are compensated by the Financial Services Compensation Scheme.
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