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Self-invested personal pensions (Sipp pension) offer far greater flexibility than ordinary personal and occupational pensions because you can have many types of investment in them.

Introduced in 1989 by Nigel Lawson, Sipps give you more control over a personal pension than if you invest solely via a pension company. From next year, even people in occupational pension schemes will be able to start one.

Although a Sipp pension has been around for some time, it is only just taking off, thanks largely to a change in pension rules which came into force last year.

Since April 2006 the maximum contribution upon which tax relief can be claimed is £215,000 or your earnings, whichever is the lower. From 6 April 2006, for the first time, HM Revenue and Customs will permit a tax-approved SIPP pension scheme to invest in property

You will be able to invest in commercial property to either lease to a third party or for your own use. The purchase price paid must be on open market terms. The SIPP would be able to borrow to assist with the property purchase. The maximum borrowing from April 2006 is 50% of your existing SIPP fund value. You must remember that the property becomes an asset of the pension fund and hence the value of it will be used to provide retirement benefits for you.

A Sipp pension gives you the freedom to switch out of poorly performing investments. It also offers the potential for much better returns, because policyholders can adopt a more aggressive investment strategy than large pension funds. And yet they get the same tax reliefs as ordinary personal pensions

A Sipp is most suitable for self-employed people who are enjoying good incomes because administration costs are far greater than with ordinary personal pensions. It is really not cost-effective unless you are contributing at least £10,000 a year to your fund.