SIPPs: sexy pensions or the next mis-selling scandal?

By Jennifer Hill, Personal Finance Correspondent

LONDON (Reuters) - It is not often that pensions are described as "sexy", but self-invested personal pensions -- SIPPs for short -- are, apparently, just that.

These do-it-yourself pensions that offer a wide range of investment options and the opportunity for investors to manage their own money have soared in popularity since they took off two years ago.

That was largely due to the biggest shake-up of the pensions system since Lloyd George introduced the Old Age Pension in 1908.

But while they might be seen by some as the "Rolls Royces" of pension savings, others fear they are the next big financial services mis-selling scandal in the making.

They are not for everyone. Far from it: many people would be better off with a traditional pension arrangement.

More than a quarter of a million people have taken out a SIPP since "A-Day" ushered in an era of unprecedented flexibility in pension saving.

The new rules, introduced on April 6 2006, scrapped restrictions on how much savers could stash in their pension fund: from then, people could save up to 100 percent of annual earnings, subject to a current cap of 235,000 pounds.

It became easier to take pension fund benefits, and the reforms also meant that, for the first time, people in company pension schemes could set up their own personal pension arrangements too.