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Post Info TOPIC: What is the difference between a SIPP and a normal pension plan?


Billy

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What is the difference between a SIPP and a normal pension plan?
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Another question I have just been asked?



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Billy

Status: Offline
Posts: 98
Date:
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A normal (money purchase) pension plan (if there is such a thing) is called a personal pension and is a no-frills pension form the traditional pension providers such as Aviva, Prudential and Standard Life.

By no frills I mean the investment options are limited to funds and there may not be a drawdown option.

A SIPP - self-invested personal pension – has a wider range of investment options including shares and bonds. Generally speaking, a SIPP is a better option for pension drawdown.

The most flexible SIPPs allow bespoke investments like commercial property and a full SIPP can borrow money to buy some investments – for example, raise a mortgage to part-fund the purchase of a property.

All the major pension providers have their own SIPPs as well as the specialist platforms such as my friends in Bristol and companies like AJ Bell

The crucial difference is that standard personal pensions do not allow for self-investment and the charges are less than SIPPs



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