SIPPS Suck

[youngguy]

to be more accurate my understanding of them sucks.

I've been researching pensions for a few weeks and now understand the basics (I think). Based upon views here I have also been looking at Sippdeal and Hargreaves Lansdown.

They certainly seem quite reasonable in terms of costs (rather than the 1-4% charges from others), but upon reading the websites the big seller seems to be along the line of "take control of your investment". This is exactly what I don't want to do! I'm in IT, not finance!

So my question is, how much effort does it take all of you to:-
understand what you should be doing in terms of choosing funds
monitoring them
changing them

I do like the idea of some control and whilst I am happy to do research I don't ever think I'll be savvy enough to confidently make decisions with 100s of K of my money in an economic environment.

Thanks in advance

[rsingh]

the big seller seems to be along the line of "take control of your investment". This is exactly what I don't want to do! I'm in IT, not finance!

Then you are kind of missing the point of them. Self Invested Personal Pension Schemes are probably not for you. Try a regular pension scheme.

[jmo21]

I've had a SIPP for 2 years now.

I took a large position in a volatile fund without understanding enough about it, and I'm trying to rebalance my SIPP.

Overall, I am +6%. The volatile fund I mention is currently sitting at +9% so I haven't currently lost out on it, but I do want to reduce my position in it - it had dropped negative at one point a few months back.

So, to answer your question, SIPP's simply are not for you by the exact definiton of what they are.

[brianmcc]

I say: if someone offered you £50,000 to spend a week or two reading about pensions, investing, and compound interest would you accept?

If you're young you can very easily improve your pension pot by that amount by making a few informed but simple choices while you're at the start of your career.

Compared to IT, pensions aren't that hard, honestly.

I highly recommend the Motley Fool books. Like most things in life, what appears complex is only that way through lack of a simple explanatoin, and the Fool books can provide that.

[ASB]

So, to answer your question, SIPP's simply are not for you by the exact definiton of what they are.

That's perhaps a little harsh. Once the OP has decided what his investment strategy is to be it could potentially still be worthwhile buying the underlying in a SIPP. This could potentially produce a more cost effective route.

A load of people for example will simply invest in a UK tracker (or a mix of various trackers) through a "standard" pension provider. And then forget about it.

It can be the case that this can be achieved more cheaply though a sipp by virtue of commission rebates, cheaper products or similar (e.g. some full replication ETFs are much more cost effective than a lot of funds even after commission rebates).

Yes, it is self invested, but that doesn't actually force active management - though if buy and hold is to be ones strategy it is probably a good idea to be comfortable with whatever one is planning to hold long term.

Of course it also depends on the sipp providers charges which may be the right route.

[youngguy]

Thanks All

Very valid points and I am also investigating personal pensions.

ASB - Thanks for your viewpoint. This has definately given me something to think about

[Waldorf]

I wouldn't invest in a pension!

They are too restrictive and having to buy an annuity is not what I want, yes there are some tax advantages but I believe that these will not outweigh the major disadvantages.

Annuity rates have been slashed in the past few years and I believe that over the next 20 -30 years they will fall like a stone as a result of increased life expectancy.

I fully use my ISA allowance each year plus top this up with other investments.

[youngguy]

I wouldn't invest in a pension!

They are too restrictive and having to buy an annuity is not what I want, yes there are some tax advantages but I believe that these will not outweigh the major disadvantages.

Annuity rates have been slashed in the past few years and I believe that over the next 20 -30 years they will fall like a stone as a result of increased life expectancy.

I fully use my ISA allowance each year plus top this up with other investments.

I believe you no longer have to buy an annuity.

[Fred Bloggs]

I believe you no longer have to buy an annuity.

Correct.

[imightbewrong]

using a pension avoids corp-tax if you are extracting from a company, so you get a 20% boost on day one.