What Is a SIPP?
A Self-Invested Personal Pension (SIPP) is a pension wrapper that gives you control over how your retirement savings are invested. While workplace pensions typically limit you to a small range of funds, a SIPP opens up thousands of investment options — from index funds and shares to bonds and ETFs.
SIPPs receive the same tax relief as any other pension. They are simply a more flexible container for your retirement savings. In this guide, we explain how SIPPs work, who they suit, what they cost, and how to choose the right one.
How Does a SIPP Work?
A SIPP works like any personal pension, with additional investment flexibility:
- You contribute money (and receive tax relief automatically or via self-assessment)
- You choose how to invest from the platform's full range of options
- Your investments grow tax-free within the SIPP
- From age 55 (57 from 2028), you can access your money via drawdown, lump sums, or annuity
Types of SIPP
| Type | Investment Range | Cost | Best For |
|---|---|---|---|
| Platform SIPP (low-cost) | Funds, ETFs, shares, bonds, investment trusts | 0.15–0.45% + fund fees | Most investors |
| Full SIPP | Everything above plus commercial property, unlisted shares | £200–£500/year + fees | Sophisticated investors, property purchase |
The vast majority of people will find a platform (low-cost) SIPP provides everything they need. Full SIPPs are only necessary if you want to hold commercial property or other specialist investments.
What Can You Invest in With a SIPP?
- Index tracker funds — low-cost funds that track market indices (e.g., FTSE 100, S&P 500)
- Actively managed funds — fund managers select investments to try to beat the market
- Exchange-traded funds (ETFs) — low-cost, stock exchange traded funds
- Individual shares — UK and international company stocks
- Investment trusts — closed-ended funds listed on stock exchanges
- Government bonds (gilts) — fixed-income securities issued by the UK government
- Corporate bonds — debt issued by companies
- Commercial property — offices, warehouses, retail units (full SIPP only)
- Cash — held on deposit within the SIPP
SIPP Fees Explained
Understanding SIPP fees is crucial — small differences compound significantly over decades:
| Fee Type | Typical Range | What It Covers |
|---|---|---|
| Platform fee | 0.15–0.45% per year | The cost of holding your SIPP with the provider |
| Fund charges (OCF) | 0.05–1.5% per year | The cost of the underlying funds you invest in |
| Dealing fees | £0–£11.95 per trade | Cost to buy or sell shares/ETFs/trusts |
| Drawdown fee | £0–£100 per year | Charged when taking income from your SIPP |
| Transfer out fee | £0–£100 per holding | Cost to move your SIPP to another provider |
Who Should Consider a SIPP?
- Self-employed workers — no workplace pension, so a SIPP is the primary retirement savings vehicle
- Experienced investors — those who want to select their own investments
- People consolidating old pensions — a SIPP makes a good home for multiple transferred pots
- Higher earners — those who want more control over larger pension sums
- Anyone topping up their workplace pension — additional contributions with wider investment choice
SIPP vs Workplace Pension
| Feature | SIPP | Workplace Pension |
|---|---|---|
| Investment choice | Thousands of options | Typically 10-30 funds |
| Employer contributions | Not usually (unless arranged) | Yes (minimum 3%) |
| Fees | Variable (can be very low) | Often capped at 0.75% |
| Flexibility | Full control | Limited options |
| Administration | Self-managed | Managed by employer/provider |
The ideal approach for employed workers is often to contribute enough to the workplace pension to get the full employer match, then put additional savings into a SIPP for greater investment choice.
How to Choose a SIPP Provider
When comparing SIPP providers, consider:
- Total fees (platform fee + typical fund charges)
- Range of available investments
- Quality of the online platform and app
- Customer service reputation
- Drawdown options and flexibility
- Research tools and educational resources
Next Steps
If a SIPP sounds right for you, compare providers on fees and features. If you are transferring existing pensions, check for any protected benefits before moving. And if you are unsure about investment choices, a pension adviser can help you build an appropriate portfolio within your SIPP.