For those approaching retirement in the current economic climate, the idea of spending their life outside of the workplace is increasingly untenable. This is due to the pension crisis that is gripping both households and workplaces across the UK, which continues to undermine the value of savings and workplace schemes.
As the collapse of Carillion highlighted, UK’s leading PLC’s have a significant pension deficit at present. In fact, the combined deficit of these companies is estimated at £62 billion, which is equivalent to 70% of their total profits.
This is why self-invested pension plans (SIPPs) are so important in the current climate, as they afford you some control over your retirement and how your funds are deployed. Below, we’ll ask why choosing the best SIPP is such a crucial step towards preparing for your retirement.
What is a SIPP and its Core Advantages?
In simple terms, a SIPP is a DIY pension plan that gives you greater control and flexibility over your future. While many traditional pensions limit your investment choice, SIPP providers offer you access to both domestic and international asset classes that deliver far greater diversity.
You can also assume greater control of a SIPP, as you determine precisely how much involvement you want to have in managing your fund and selecting investment options. You can keep full control over your assets, or your provider can fulfil an advisory or discretionary management role that helps to guide and influence your choices for the better.
This is the main advantage of a SIPP, particularly in a climate where it’s becoming increasingly difficult to save and workplace savings are being placed at risk. Even as inflation remains disproportionately high and the UK’s pension deficit continues to soar, you’ll have the opportunity to maximise returns and build a secure store of wealth over time.
Why Choosing the Best SIPP Matters
While these advantages are hard to ignore, it’s important to note that not all SIPP providers have been created equal. Companies such as Bestinvest have enhanced the service and the product that they offer to clients, for example, both in terms of the range of assets available and the simplicity with which individuals can transfer existing pensions into a single SIPP.
To this end, this type of service provider will also contribute financially to any exits fees that your current pension providers charge, in some instances up to the value of £500.
This type of small but significant detail is crucial when planning for your retirement in an austere economic climate, as it enables you to make incremental savings from the outset and make the most of your capital over a sustained period of time.