Dreaming of long lazy afternoons on the beach when our working days are done is one thing, working out how we’re going to pay for it is a different matter. Starting to build your pension pot ASAP is always a good idea. One solution that’s becoming increasingly popular is a Self-Invested Personal Pension (SIPP). The unique advantages that SIPPs can offer Manx residents are not widely understood – so we asked pensions expert Stephanie Hatton from Zurich International to bust some common myths.
I’m in my 20s, I don’t need to start thinking about retirement yet.
It’s understandable that if you have 40 years or more until you reach retirement age then taking out a pension might not seem like the most important priority. But if you consult any reputable independent financial adviser, they will say it’s better to begin planning and saving ASAP. Starting to invest in your retirement doesn’t need to be expensive, so if you budget sensibly you can still enjoy the lifestyle you want to have right now. It’s worth remembering that if you start planning now, in 10 or 20 years’ time you could have a healthy pension pot that will give you and your family the financial security required to face the future with confidence. So if you decided to start a SIPP now, you might even be able to retire at 55 and be on that beach while your workmates still have 10 or more years to go.
A SIPP is complicated to set up and administer
It’s true that some SIPPs are complicated, but it isn’t for Isle of Man residents because they can take advantage of a very simple, no-nonsense SIPP product. The Zurich International Personal Pension Scheme Simple SIPP offers a retirement solution which allows you to benefit from flexible pension options that are available for local residents. It also suits people who want a straightforward solution because we understand that not everyone has the experience or the time to manage complex investments. In addition to simplicity, our SIPP has the added benefits of reduced costs and being easy to manage by using Zurich International Online (ZIO) portal.
I don’t need a personal pension – the state pension and/or my workplace pension will be enough.
For some people that may be the case, but a lot depends on an individual’s personal circumstances and their employer. It’s important to note that no one knows for certain whether or not state pension payments will increase to keep pace with the cost of living over the next 40 years. It’s also worth bearing in mind that most people in their 20s now will be unlikely to work for the same employer until they retire – so that creates another element of uncertainty. What is certain is that a personal pension gives you more control over your pension pot. That means being in a stronger, more confident position than someone who is subject to the many economic, political and social factors that are beyond their control, and which could all significantly impact the relative value of both state and workplace pensions in the decades ahead.