A pension wrapper is essentially a financial service that brings together all of your current pension schemes and investments, bringing greater flexibility and control over your retirement plans. The major advantage of using one of these wrappers is the tax benefits. In the long term, tax can have a huge impact on the return of your investments, subsequently more and more customers are choosing Self Invested Personal Pension plans to keep their investments under one tax efficient umbrella.

The two main types of wrapper which have been of most benefit to pension schemes are the Self Investment Pension Plan (sipp) and the Small Self Administered Scheme (saas). The sipp is predominantly for the self employed or general employees and the saas is the corporate alternative used by company directors and managers.

With one of these pension wrappers it is possible to bring together shares, bonds, unit trusts and investment trusts as well as your pension plan. Therefore rather than being limited by traditional pension plans whereby you have little choice over your investment, these pension wrappers improve control and allow for regular investment reviews.

Although originally more popular in the USA and Australia, the pension wrapper has now started to become increasingly popular in the UK. Additionally sipps are no longer seen as an elite form of pension plan and you can now invest as little as £50 per month into a sipp.

Although sipps are predominantly offered as a “do it yourself” online product the risks of making the wrong investments and therefore jeopardising your pension plan is substantial.  It is also worth noting that these online sipps may be limited in the products they offer, for example they may be limited to investments only in funds and shares and miss out the huge advantage of being able to use your sipp for commercial property. It is therefore advisable to seek independent advice. Contact us today for a free 5 minute review from one of our partnered FSA regulated advisors.