A Self Invested Personal Pension (SIPP) is pension that you're solely responsible for. This means you have to choose and manage your own investments.

It works very much like a standard personal pension, except you have more flexibility with what investments you can choose. A SIPP holds your investments until you retire, and then you start accessing the funds.

It is often referred to as a 'SIPP pension' or even a 'DIY pension'.

Is a SIPP right for you?

If you're looking into SIPP providers because you fancy opening a SIPP, it's important that you have some financial knowledge. You'll need to understand how to manage and invest in individual funds. If you try to manage a SIPP without knowing how to do this, you could lose the money you put in.

Some people would prefer to control where their money goes, and understand how to do this themselves. These people might not want a pension company controlling where their savings are invested. If this sounds like you, you might like to open a SIPP.

If you wouldn't be comfortable managing your own SIPP investments, then speak to an independent financial adviser. It might be that SIPPs aren't quite right for you. There could be more suitable pensions for your needs.

Speak to a pensions broker about whether a SIPP is right for you and discuss SIPP pension rules too.

What's the difference between a standard pension and SIPP pension?

With a standard personal pension, the investments are all managed for you by your pension provider and you don't need to get involved.

But with a SIPP, you're free to manage all the investments yourself. You can pay an investment manager to do it for you, but they're designed for people who want to manage their own fund. You can switch your investments whenever and to wherever you like - and you just instruct your provider to do what you want them to.

Standard pensions also have a shorter list of funds to choose from.

What can you invest in through your SIPP account?

Our SIPP comparison shows you which markets you can invest in when building your SIPP. The options include:

  • Shares in AIM and FTSE

  • Bonds

  • Permanent Interest Bearing Shares (PIBS)

  • Personalised pension funds

Research each market before choosing the best SIPP company for you. SIPP providers all offer different funds, with varying investment strategies.

Here's more information on how SIPPs work.

How much does it cost to have a self invested personal pension?

The costs can vary a lot, depending on how you invest in your SIPP.

There's a range of charges you might expect to see if you have a self invested personal pension.

Annual management fees are the most common type of fee. Your annual management fees can either be a percentage charge of your entire pension pot each year, or a fixed fee.

Dealing charges are another type of charge you might see. These are fees for buying and selling investments in your SIPP and are usually based on how often and how many times you make trades.

There are other charges to look out for. These include annual administration charges and exit/transfer fees. You should also watch out for income drawdown charges.

Before you start investing in a SIPP, make sure you do your research to find the best SIPP provider for your needs. Check out all the charges that apply when managing a pension with each of the SIPP providers you're looking at.

Can you transfer your pension?

You might be able to. If your new pension company allows transfers in, and your existing pension company allows transfers out, you might be in luck. You might be able to do a pension to SIPP transfer, although you could be charged for it.

When a pension company allows transfers in, it's called 'in specie'.

What does 'in specie 'mean exactly?

It means that you don't need to sell the individual investments in your pension when you change pensions. Instead, you can just move the ownership of them to another company.

An in specie transfer is when you transfer your pension funds from one pension scheme to another. But you do this without selling the underlying assets and investments.

In specie contributions are when you transfer an asset from outside of a pension fund into your chosen company.

Be aware that in specie contributions are rarely used. That's because there are usually issues that occur when transferring the actual value of each asset.

What's the situation with SIPP tax relief?

A SIPP is the same as any other kind of pension in that you'll get income tax relief on what you pay in.

When it's time to take the money out of your SIPP, on retirement or when you reach 55, you can take 25% as a tax-free lump sum. You can choose how you receive the rest of your money.

What are the pros and cons of SIPPs?

As with any pension, SIPPs come with advantages and disadvantages.

The pros of a SIPP include:

  • You have the freedom to control your fund and invest how you like

  • You have a long list of funds to choose from to invest in

  • You can get tax relief on your savings

  • You can pay in until you're 75

  • You can pass on some of your wealth, inheritance free

  • The SIPP withdrawal rules are flexible

The cons of a SIPP include:

  • You're responsible for making all the decisions yourself

  • They're only suitable for people who understand investing

  • You'll need to spend time and put effort into choosing and managing your portfolio

  • Your money is locked in until you're at least 55

  • There's a limit on how much tax relief you can get

  • The charges can be higher than with a standard pension.

Are there different kinds of SIPPs?

Yes. As well as finding the best SIPP provider you'll also need to work out which type of self investment pension is right for you.

A full SIPP gives you the most choice on where to invest. They're best suited to people with large pension funds, who have lots of experience investing. The charges are high but you do usually have access to a team who you can discuss your investments with. They might be able to help you with complex investments, too.

The other type is a low cost SIPP. This is sometimes called a low-cost DIY SIPP or lite SIPP. It still gives a lot of choice on where you can invest, but not as much as a full SIPP. There's no option to own property or offshore funds, or to invest in unquoted shares.

A low cost SIPP is best for people with smaller pension savings. You might be able to start one of these with a sum as small as 5,000.

The charges are lower, so if you're looking for a good value pension, look out for the cheapest SIPP lite you can find. With this kind of SIPP, you won't get any advice from the pension provider. Low cost SIPP providers just act on your instruction.

Whichever type you choose, it's important to find the best SIPP provider, UK wide, for your needs.

What are the SIPP pension rules in terms of how much you can pay in?

You can put as much money as you'd like into your pension, to build funds for your retirement.

But don't forget that there are limits on the amount you can put in and get tax relief on.

If you're earning money, you can put 100% of your earnings before tax in, up to 40,000. Over that, you won't get tax relief.

If you're a high earner, and bring in more than 240,00 a year, the amount you can put in is reduced for anything over 240,000. Over that, you can put in 1 for every 2 earned, until the tax-free limit reaches 4,000.

If you're not earning money, you can still pay into a pension scheme and qualify to have tax relief added. You can put 2,280 a year into your pension and get tax relief of 720 added, which means you can add 3,600 a year to your pot.

Don't forget there's also a lifetime allowance on your pension. For the current tax year this is 1,073,100. This allowance is the maximum value of the pension benefits you can access without having to pay tax.

How are SIPPs managed?

Most of the time, SIPPs are managed online. Sometimes you can do it by phone or post, but all SIPP providers are different and have different SIPP rules, so you'd need to check the details.

Managing your self-invested pension online is the easiest option. It works like online banking. You can buy and sell investments, and monitor their progress, at the click of a button.



Who is responsible for the performance of my SIPP?


You are. If you are not sure how to manage your SIPP, speak to an independent financial adviser.


Do I have to choose all of the funds in my SIPP?


Yes, but most pension companies offer SIPPs that are built from a range of funds categorised by their level of risk and volatility. Find out more here.


When can I withdraw my SIPP?


Usually when you reach 55, but check with your pension company as their SIPP terms and conditions may set a different age.


How is my retirement income paid from a SIPP?


When you are 55 your pension company will contact you to ask if you want to keep paying into your SIPP or if you want to withdraw it. Read here for more.

About our SIPPs comparison


Who do we include in this comparison?


We include pension companies from our panel that offer self invested personal pensions. They are regulated by the Financial Conduct Authority (FCA).

Here is more information about how our website works.


How do we make money from our comparison?


We have commercial agreements with some of the companies in this comparison and get paid commission if we help you take out one of their products or services. Find out more here.

You do not pay any extra and the deal you get is not affected.