SIPP stands for Self Invested Personal Pension so you might like to think of it as a Do It Yourself sort of pension. In reality, however, it's likely that you'll use the services of an advisor to help fill the SIPP up with the investments that make sense for you. Like all pension pots money going in gets topped up with a tax credit so your pension pot is a very effective way of saving for your retirement. When it's time to retire you cash in your SIPP and buy an annuity which is used to pay you your Pension.

SIPPs provide a more flexible method of building a Pension than "off the shelf" pension schemes as you can put a wide range of existing investments into your SIPP. For instance Commercial Property can be transferred into a SIPP - though not Buy To Let properties. The Buy To Let option was widely advertised but this was scrapped by the Government as was the notion of investing in fine wines. As you would expect, if you use an advisor there are costs for setting up a SIPP and managing it. There are set up, transaction and annual charges that have to be borne - though these costs have been coming down as more SIPP providers enter the market.

1. Highly flexible mechanism for building your Pension
2. Very attractive for Business Owners who want a tax efficient mechanism to own a Commercial Property
3. Like all pensions it is highly tax efficient

Five points to consider on why you may need a SIPP or to increase your Pension provision generally.

1. The State Pensionable Age is going up for both men and women. The age at which woman will receive a State Pension will steadily increase from 2010 and see the State Pension Age for women reaching 65 by 2020. But it gets worse, by 2046 the the State Pension Age for men and women will be 68. (Source Office for National Statistics)
2. The full basic State Pension is £87.30 a week for a single person and £139.60 a week for a couple (correct for year 2007-2008). Your personal circumstances will impact exactly how much you receive but importantly you must have paid sufficient National Insurance Contributions to qualify. This can be particularly difficult if you have been looking after children for a large part of your career. To get the Full State Pension men should have been paying NI for at least 44 years, while women require 39 qualifying years. (Source DirectGov)
3. We are living longer and a 2002 survey shows that the majority of people of working-age in the UK expect to enjoy a retirement of 20 years. A mere 7 per cent expected to have a retirement of less than 10 years (Source Office for National Statistics). Increasing life expectancy and lower fertility rates mean that the proportion of our society of State Pensionable age is set to increase from around 11.3 million in 2006 to almost 15 million by 2031 and that on average future pensioners would be worse off.
4. In 2005, of the 9.8 million individuals with personal and stakeholder pensions in the UK Just over half of these males and two thirds of these females had a total fund value of less than £10,000  (Source Office for National Statistics). The Department of Work and Pensions estimate that around 7 million people are not saving enough for their retirement.
5. Pensioners on fixed incomes are more exposed to certain aspects of inflation than others. Food and Heat accounts for around one third of pensioner expenditure resulting in a poorer standard of living than had been anticipated. Estimates suggest that Pensioner inflation is double that of the Retail Price Index which becuase it includes household goods such as Televisions is an inappropriate measure for Pensioners.

SIPPs are typically of interest to:

1. Directors and owners of Small and Medium Sized Enterprises.
2. Businesses owners and directors who wish to use their own Pension fund(s) for the acquiisition of a Commercial Property for their business.
3. Individuals who are dissatisfied with their Pension performance and who wish to have greater control and flexibility.
4. Individuals who a collection of existing investments and who want to shelter the returns within their Pension.
5. Individuals who have unquoted holdings in businesses and who are looking for a tax efficient method for ultimate disposal.

1. Review your current circumstances
   1. how much do you earn,
   2. how much do you spend,
   3. how much "spare cash" do you have
   4. does your business rent or own a property - would this be something worth reviewing fully
   5. what investments do you have that are not tax sheltered 
2. Think about your future
   1. when do you want to retire
   2. does your spouse have a pension
   3. do you qualify for State Pension
   4. what other assets could you sell or release equity on when you retire 
   5. How well do you want to live when you retire
   6. consider how much you'll need
   7. how will you get that sum
3. Call for no-commitment advice