The FSA is warning people about the risk of unregulated investments in self invested personal pensions or SIPPs.
The FSA says it believes consumers are being advised to invest some of their retirement money into unregulated investments through a self invested personal pension.
Mexican golf courses, Bulgarian forests and country clubs may not seem like your average pension fund, but that’s what the regulator the Financial Services Authority is warning that some people may have invested their pension money in through self invested personal pensions (or SIPPs). Self invested personal pensions give you much more freedom about what you invest your pension fund in than ordinary private pensions, but the FSA is concerned that some people are taking on far more risk than they realise and they could lose their money.
Self invested personal pensions (SIPPs) – is the DIY approach the right one for your pension?
Self invested personal pensions give you control over your retirement fund, but how exactly do they work?
Most people who have a private pension pay money to a pension or insurance company each month and that company invests their premiums for them. OK, so you can choose which fund or funds your money is invested in, but what makes up that fund is down to the pension company. With a self invested personal pension or SIPP, you have control over where your money goes and you can invest your pension money in a much wider range of investments, including shares, hundreds of different investment funds and even property.
Stakeholder pensions from different providers may look similar - until you scratch beneath the surface.
If you’re thinking of taking out a stakeholder pension and don't know what to look for, here are some suggestions.
If you don’t have a company or employer based pension scheme that you’re able to sign up to, the chances are you’ll opt for a stakeholder pension. Confusingly, stakeholder pensions can be offered through your workplace or taken out directly with a pension provider (or after you’ve taken advice from an independent financial adviser). If you take out a stakeholder pension through your work, you probably won’t be able to choose which pension company provides it. But if you’re buying it yourself, you can. But what should you look for?
