Self-invested personal pensions, or SIPPs, are offered by insurance companies and give savers the opportunity of incorporating funds managed by different investment managers within one pension portfolio. This diversity is particularly attractive if you have a large fund and are considering using pension fund withdrawal products after retirement. For smaller funds, however, it may not be cost-effective.

Anyone who is not a member of a company pension scheme can take control of their own pension. For those considering pension fund withdrawal (PFW), the most flexible vehicles are SIPPs.

SIPPs have gained in popularity as investors have become more financially aware. Many have been put off by the traditional personal pension method, whereby they lose control over at least 75% of their fund when they retire.

With a SIPP, investments can essentially be segmented. This means that just part of the fund can be used for PFW, while the balance can be moved around at will.

A SIPP is a particularly useful vehicle if an individual or partnership wants to buy commercial property from which to carry out business. The property can be in or outside the UK. Any borrowing must be authorised and monitored by a scheme administrator. Property purchase is not permitted after age 65 and borrowing is not permitted for any purpose once benefits have been taken. Commercial property can be leased to a business. The rent paid to the fund is tax deductible and the fund receives the rent gross. Borrowing is possible and banks will usually lend up to 70% of loan to value.

• Stocks and shares traded on any recognised stock exchange, including equities, fixed-interest securities issued by governments or other bodies, debenture stock and other loan stock, warrants (for equities), PIBS, convertible securities

• Unit trusts, OEICs and investment trusts

• Insurance company managed funds and unit-linked funds

• Endowment policies traded on a recognised market

• Deposit accounts with an authorised institution in any currency

• Commercial property, including land - whether inside or outside the UK

If you are an appropriate investor and have an existing personal pension fund, you could transfer some or all of it to a SIPP. If you earn a high enough income and are about to retire from a company that has an occupational pension scheme, you could also consider a SIPP. This has to be carried out before any benefits are taken. The balance of the money can be invested according to your own needs.

On death, the tax position basically depends upon whether you have started PFW or not. If there has been no PFW, the fund can in most circumstances be distributed to the chosen beneficiaries free of inheritance tax (unless the funds are derived from an occupational scheme transfer).

Once PFW has started, there is a special tax charge of 35% on that element of the fund used for withdrawals. Spouses can take a pension from the fund after the member's death and can then nominate further beneficiaries to receive the remaining lump sum. The age at which the flexibility ends is 75 for the surviving spouse or when the original policyholder would have reached 75, whichever is the sooner.

A SIPP can be extremely beneficial to the right investor, offering a far wider degree of investment opportunity and the facility to take advantage of annuity deferral. If you would like to look at the options available to you, please e-mail or contact us to arrange a meeting.