Affecting the way you invest
1 June 2007
The new legislation separates the link between retirement and the personal pension which funds it.
This has had an important knock-on effect for UK retirement planning. You can now see your pension for what it is; an investment portfolio in a tax-free wrapper. One which will carry you into your retirement and beyond. One which you can control.
New products have come into prominence. Self-invested personal pensions (SIPPs) allow individuals a greater measure of control over their investments.
Although not suitable for everybody, the beauty of SIPPs is that, by and large, they make it far easier to manage your pension contributions. You can see instantly how well balanced your investment portfolio is - from simple cash-based products like deposit accounts, through guaranteed equity bonds, income bonds and corporate bonds, to commercial property and high end investments in stocks and shares - and review how well each segment is performing.
The basics section has more information about SIPPs
Take expert advice
You can rebalance your portfolio at any time, though this is best done with the help of expert professional advice, and as you approach retirement you may wish to gradually shift your investments into more stable assets. By the time you retire, the bulk of your money could move towards cash and bonds to help reduce volatility, risk and help produce a steadier income.
That said, since you anticipate living to a ripe old age and might not be thinking of retiring in the conventional sense - you might well be tempted, if you can afford the risk, to keep a chunk of your savings and investments in a portfolio of shares and commercial property. This can give you a better prospect for income and capital growth.
In the new pension age, transparency is the name of the game.
You can find out more about SIPPs and other pension investments at www.moneymadeclear.fsa.gov.uk
