Pillar guide · SIPPs

SIPP fees, providers and rules — the UK hub.

A broader SIPP hub for comparing fees, provider models, investment choice, transfer checks, drawdown options and tax rules. For the beginner definition, start with What is a SIPP?

By Pension Bible editorial team·Last reviewed 11 May 2026·15 min read

What this SIPP hub covers

A SIPP — Self-Invested Personal Pension — is a type of personal pension that gives the account holder control over how the money is invested. If you are looking for the short beginner definition, start with what is a SIPP?. This page goes wider: fees, provider models, transfer checks, workplace comparisons, investment scope and retirement access.

Where a workplace pension typically offers a limited menu of pre-selected funds, a SIPP opens up a wider investment universe: index funds, actively managed funds, exchange-traded funds (ETFs), investment trusts, individual shares, government bonds, and in some cases commercial property.

The "self-invested" part is the key distinction. The account holder chooses what to buy, when to buy it, and when to sell it. The pension wrapper itself works identically to any other UK pension — you get tax relief on contributions, the investments grow free of capital gains tax and mostly free of income tax, and you can access the pot from age 55 (rising to 57 from April 2028 for many people).

SIPPs have existed since 1989, but they used to be expensive, complex products aimed at wealthier investors with large pots. The market has changed. Today's platform SIPPs can offer low-cost access to funds, ETFs and shares, although provider fees, dealing charges, drawdown charges and fund ranges still vary.

Who commonly compares SIPPs?

SIPPs are not for everyone, and they're not inherently "better" than a workplace pension. They solve specific problems that certain groups of people have.

The self-employed. If you don't have an employer, you don't have a workplace pension. A SIPP is the most common way for sole traders, freelancers, and contractors to save for retirement with tax relief. You can contribute up to £60,000 per year (or 100% of your earnings, whichever is lower) and receive tax relief in the same way as an employed person. Our self-employed pension calculator can show you the tax saving.

Company directors. If you run a limited company, you can make employer contributions to a SIPP from the company. These may be deductible against corporation tax and do not normally count as personal income, subject to the usual wholly-and-exclusively, annual allowance and scheme rules. See our director pension calculator for the specific numbers.

People comparing old workplace pots. If you've changed jobs several times, you may have multiple small pension pots with different providers and fees. A SIPP is one possible consolidation route, but the comparison should include safeguarded benefits, exit charges, employer contributions and investment choice. Our pension consolidation calculator can model the fee side.

People who want investment choice. If your workplace pension only offers a handful of funds and you want access to global index trackers, specific sectors, individual shares, or investment trusts, a SIPP gives you that flexibility.

People approaching retirement who want drawdown. Not all workplace pensions offer flexible drawdown. A SIPP that supports drawdown is one route people compare, but any transfer comparison needs to include safeguarded benefits, exit charges, provider fees and whether regulated advice is needed.

SIPP fees — the two layers you need to understand

SIPP costs come in two layers, and your total cost is both combined. This is exactly the same structure as workplace pensions, but with a wider range of fee models.

Layer 1: Platform fee

This is what the SIPP provider charges you for the account. It comes in two flavours:

Percentage-based: A percentage of your pot value, charged annually. Current published examples include Vanguard at 0.15% capped at £375/year, AJ Bell at 0.25% on the first £250,000, and Hargreaves Lansdown at 0.35% on the first £250,000, with lower tiers above that.

Flat-fee: A fixed monthly or annual charge regardless of pot size. Interactive Investor's Core plan is £5.99/month plus a SIPP admin fee, so the SIPP cost is about £101.88/year for pots up to £100,000 under its current published tariff. Flat-fee structures can change by plan size, so always check the current tariff.

The crossover point is important. Below about £50,000-£100,000, percentage-fee platforms are often cheaper because the flat fee works out as a high percentage of a small pot. Above that, flat-fee platforms can become cheaper. For example, a flat-fee SIPP at about £252/year on a £200,000 pot is around 0.13% before fund charges, while a 0.35% percentage platform would be about £700 before fund charges.

Layer 2: Fund charges (OCF)

Whatever you invest in has its own charge — the Ongoing Charges Figure (OCF). This is usually the same regardless of which platform you're on. For example, the same tracker fund can have the same OCF whether held through different SIPP platforms, while the platform fee differs.

Index trackers typically charge 0.05-0.25% OCF. Actively managed funds often charge 0.5-1.5%. Fund choice can matter as much as platform choice when it comes to total cost.

Your total annual cost = platform fee + fund OCF. On a £100,000 pot invested in a global index tracker:

Over 25 years with £500/month contributions, the difference between lower-cost and higher-cost options in this table can compound into tens of thousands of pounds. Use the calculator below to see the impact for your specific pot size and contribution rate.

For a detailed breakdown of all the fee types and what's reasonable, see our full pension fees guide.

The investment universe — what you can hold in a SIPP

The range of investments available depends on the SIPP provider, but most modern platforms offer:

Index funds and ETFs. These are commonly used for low-cost diversified investing. A single global index fund can give exposure to thousands of companies worldwide for under 0.25% per year, though the appropriate investment mix depends on risk tolerance, time horizon, other assets and whether advice is needed.

Actively managed funds. Funds run by professional fund managers who try to beat the market. They charge more (typically 0.6-1.5% OCF) and the evidence is that most underperform their benchmark index after fees over the long term. Some investors prefer them nonetheless.

Investment trusts. Listed on the stock exchange like shares, these are closed-ended funds that can trade at a discount or premium to their underlying asset value. They can use gearing (borrowing) to amplify returns and are common for income-focused strategies and specialist sectors like infrastructure or private equity.

Individual shares. Most full SIPPs allow you to hold individual UK and international shares. This gives maximum control but requires more knowledge and time. Dealing fees typically apply (£5-£12 per trade on most platforms).

Government and corporate bonds. Gilts and corporate bonds can be held directly or through bond funds. Increasingly relevant as you approach retirement and want to reduce equity exposure.

Cash. All SIPPs let you hold cash within the wrapper. Interest rates on SIPP cash vary significantly between providers — check before parking large amounts.

The one investment most SIPPs do not allow is residential property. You can hold commercial property in a SIPP, but this requires a "full" SIPP (rather than a "platform" or "lite" SIPP) and comes with significant complexity and cost. For most people, it's not relevant.

Opening a SIPP — the practical steps

Opening a SIPP is straightforward and can usually be completed online in 15-20 minutes:

1. Compare providers. Compare platforms based on pot size, investment preferences, dealing charges, drawdown charges and service model. Use our pension fee calculator and provider directory to compare.

2. Complete the application. You'll need your National Insurance number, a UK bank account for contributions and withdrawals, and standard identity verification (passport or driving licence). Most providers verify identity electronically.

3. Set up contributions. You can contribute via direct debit (monthly), one-off bank transfer, or by arranging employer contributions. Your provider will claim basic-rate tax relief (20%) automatically and add it to your pot — this usually takes 6-10 weeks.

4. Select investments. This is the investment-risk decision. Many people compare diversified multi-asset or global index funds, but the specific investment choice needs to be considered against risk tolerance, time horizon and need for advice.

5. Claim higher-rate tax relief where relevant. If you're a higher-rate or additional-rate taxpayer, your SIPP provider usually only claims basic-rate relief. The extra relief is claimed through self-assessment or by asking HMRC to adjust your tax code.

Transferring into a SIPP — what to check first

Transferring existing pension pots into a SIPP is one of the common reasons people compare providers. The process itself can be simple — the new provider often handles the paperwork — but there are critical checks before initiating a transfer.

Guaranteed annuity rates (GARs). Some older pension policies include a guaranteed annuity rate — a promise to convert your pot into income at a set rate. A GAR of 8% on a £100,000 pot would give £8,000/year guaranteed for life. Published open-market rates may be lower or higher depending on date and terms. GARs are usually lost permanently on transfer, so they need checking before moving a pension.

Protected tax-free cash. The standard tax-free lump sum is 25% of your pot. Some pre-2006 pension policies have protected rights to a higher percentage (sometimes 100% in very old contracts). These protections are lost on transfer. Check before moving.

Exit fees. Most modern pensions have no exit fees, but some legacy policies charge up to 1% (the FCA cap since 2017). Some very old policies have higher exit charges that were grandfathered. Ask for the exact figure in writing.

Employer contributions. If you transfer your active workplace pension to a SIPP, your employer will usually stop contributing to the transferred arrangement. Many comparisons keep the active workplace pension separate because employer contributions and salary sacrifice can outweigh any platform-fee saving. Old, dormant pots can then be compared on their own terms.

In-specie vs cash transfer. Most transfers involve selling your old investments, transferring as cash, and buying new investments in the SIPP. This creates "out of market" time (typically 2-6 weeks). Some transfers can be done "in specie" — the investments transfer directly without being sold — if both providers hold the same funds. Ask your new provider whether in-specie transfer is available.

SIPP vs workplace pension — comparison points

This is not necessarily an either/or decision for employed people. A workplace pension can provide employer contributions and salary sacrifice access, while a SIPP can provide broader investment choice or a different fee structure for old pots.

Workplace pension may matter more when:

• Your employer contributes (you lose this if you opt out)
• Your employer offers salary sacrifice (NI savings on top of tax relief)
• The workplace scheme has competitive fees (under 0.4% total)
• You want simplicity and don't care about investment selection

A SIPP may be compared when:

• You're self-employed or a company director
• You want investment choice beyond the workplace default fund menu
• Your workplace scheme has high fees (above 0.5% total)
• You're consolidating old pots from previous employers
• You're approaching retirement and want flexible drawdown options
• You want to make additional voluntary contributions beyond your workplace pension

For the detailed fee comparison, use SIPP vs workplace pension charges. For provider cost comparisons, see AJ Bell vs Vanguard, Interactive Investor vs Vanguard, and the UK pension fee data.

Tax relief in a SIPP

Tax relief in a SIPP works identically to any other pension. There is no special SIPP tax treatment — the wrapper is the same, only the investment options differ.

How relief at source works in practice: You contribute from post-tax income. The SIPP provider claims basic-rate relief (20%) from HMRC and adds it to your pot. If you contribute £800, HMRC adds £200, and £1,000 goes into your pension. This happens automatically but can take several weeks.

If you're a higher-rate taxpayer (40%), you've paid 40% tax on the income but only received 20% back through the provider. You claim the additional 20% through self-assessment. On a £1,000 gross contribution, this is an extra £200 back to you (either as a tax refund or a reduction in your tax bill).

If you're an additional-rate taxpayer (45%), the extra relief is 25% — claimed the same way.

The annual allowance applies across all your pensions: workplace and SIPP combined. In 2026/27, it's £60,000 or 100% of your earnings, whichever is lower. If you exceed it, you pay a tax charge that claws back the excess relief. You can carry forward unused allowance from the three previous tax years — our pension tax guide covers this in detail. See our pension fees guide for how fees interact with contributions.

Drawing from a SIPP in retirement

From age 55 (57 from April 2028), you can access your SIPP. There are three main options, and you can combine them.

Flexi-access drawdown

The most popular option in 2026. You designate your pot (or part of it) for drawdown. You take 25% tax-free (either as a lump sum upfront or in stages), and the remaining 75% is taxed as income when you withdraw it. The pot stays invested and (hopefully) continues to grow. You choose how much to take and when — there's no requirement to take a regular income.

The advantage: flexibility and continued investment growth. The risk: you can run out of money if withdrawals are too high or if markets fall sharply early in retirement (sequence-of-returns risk). Our pension drawdown calculator can help model withdrawal scenarios.

Uncrystallised Funds Pension Lump Sum (UFPLS)

A less common option where you take lump sums directly from your uncrystallised pot. Each lump sum is 25% tax-free and 75% taxable. No need to formally enter drawdown — you just take chunks as needed.

The tax treatment is identical to drawdown; the difference is administrative. UFPLS can be simpler for people taking occasional lump sums rather than regular income.

Annuity purchase

You use some or all of your pot to buy a guaranteed income for life from an insurance company. The annuity rate depends on your age, health, pot size, and prevailing interest rates. In May 2026, published market examples for a healthy 65-year-old were around 7.9% on a single-life level annuity with no guarantee — meaning a £100,000 pot indicated around £7,900/year before tax.

Annuities fell out of favour after the 2015 pension freedoms removed the requirement to buy one, but higher interest rates have made them more visible again. Some retirees compare a guaranteed-income floor with flexible drawdown. See our annuity rates UK page and annuity calculator for current indicative examples.

Annual allowance considerations

The annual allowance is the maximum you can contribute to all pensions in a single tax year while retaining tax relief. In 2026/27, it's £60,000 or 100% of your earnings, whichever is lower.

Key points for SIPP holders:

• The allowance applies across all pensions. If your employer puts £10,000 into your workplace pension (including salary sacrifice), you can contribute up to £50,000 to your SIPP.
• Carry forward: If you didn't use your full allowance in any of the three previous tax years, you can carry the unused portion forward. This is particularly useful for the self-employed with variable income or for people receiving bonuses or windfalls.
• Tapered annual allowance: If your "adjusted income" exceeds £260,000, your annual allowance is reduced by £1 for every £2 above £260,000, down to a minimum of £10,000. This mainly affects high earners and company directors.
• Money Purchase Annual Allowance (MPAA): If you've already taken taxable income from a defined contribution pension (through drawdown or UFPLS), your annual allowance for future contributions drops to £10,000. This is a permanent restriction and a critical consideration before starting drawdown.

FAQ

What's the difference between a SIPP and a personal pension? A SIPP is a type of personal pension. The distinction is investment choice: a standard personal pension (like PensionBee or a traditional insurance company pension) offers a curated menu of ready-made funds. A SIPP offers the full investment universe — funds, ETFs, shares, bonds, investment trusts. In practice, the term "SIPP" is used for any personal pension with broad investment options.

Can a SIPP make sense for small amounts? It depends on the provider. Percentage-fee SIPPs (like Vanguard at 0.15%) can be cost-effective even for small pots. Flat-fee SIPPs can be expensive on small pots: Interactive Investor's current Core SIPP cost is about £101.88/year including the pension admin fee, which would be just over 2% on a £5,000 pot before fund charges. Match the fee model to your pot size.

Can I have a SIPP and a workplace pension? Yes. The annual allowance (£60,000) applies across all pensions combined, but there's no rule limiting the number of pension accounts you can hold. A common comparison is to model workplace contributions up to any employer match, then compare additional saving routes by fees, tax treatment, investment range and access rules.

How do I claim higher-rate tax relief on my SIPP? Through your self-assessment tax return. Enter your gross pension contributions in the pension section. If you don't file self-assessment, you can call HMRC and ask them to adjust your tax code. Either way, the extra relief comes to you as a tax refund or reduced tax bill — not as a top-up to your pension pot. Our pension tax guide covers this in detail.

What happens to my SIPP if I die? If you die before 75, beneficiaries can usually take inherited defined contribution pension money free of income tax. If you die after 75, beneficiaries usually pay income tax at their marginal rate on withdrawals. The inheritance tax position is changing from April 2027 under proposed reforms, so see pension IHT reform 2027 for the latest context.

Can I transfer my SIPP back to a workplace pension? In principle yes, if the workplace scheme accepts transfers in. In practice it's uncommon — most people transfer the other way. The main reason to transfer into a workplace scheme would be to access salary sacrifice NI savings on the transferred amount, which is not how salary sacrifice works (it applies to ongoing contributions, not transfers).

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Pension Bible is an editorial publication, not a financial adviser. The information in this guide is general guidance based on publicly available data. For personal recommendations about your specific pension, speak to an FCA-regulated financial adviser.