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The ideal self-invested personal pension (SIPP) provider will offer the most competitive fees for your specific needs, a broad selection of investment options, and a user-friendly platform.
SIPPs, or self-invested personal pensions, provide more control over how your pension fund is invested compared to other pension types. Since their inception, they have become a highly favored method for UK investors to build a pension pot outside of their workplace scheme.
With a SIPP, you can invest in a variety of stocks and funds. Most platforms also offer managed options, often referred to as ready-made portfolios or pre-constructed investments.
Our curated list of top SIPP providers for various scenarios is presented below in alphabetical order. We also provide additional information about SIPPs, explaining how they operate and the options available for withdrawing funds when the time comes.
Top SIPP Providers
Fidelity
Broad investment selection and complimentary fund trading
Hargreaves Lansdown
Outstanding customer support and no-cost fund trading
Interactive Investor
Flat-rate investing with SIPP-only fees at £5.99 or £12.99 per month
InvestEngine
ETF investing with no trading or account fees
Prosper
No account fee, trading fee, and 30 ETF fees reimbursed
Selecting the Best SIPP Provider
When comparing SIPP providers, consider the level of service you require. Providers generally compete on fees, which is the primary factor to consider. Excessive fees can diminish the value of your portfolio, so it is crucial to minimize costs whenever possible.
However, the most affordable SIPP may not always be the best choice—it depends on how you plan to utilize the investment platform. Some platforms offer low fees but a limited range of investments.
Key Considerations
- Determine what type of investor you are. If you frequently trade, opt for a service that does not incur high trading fees and provides adequate customer support, investment research, and a diverse selection of investments.
- Evaluate the size of your pension pot. If transferring existing pensions to a SIPP, calculate the annual account charges with different providers. For larger pots, a subscription model might be more cost-effective.
- Consider how you will access your funds at retirement. Ensure the provider offers flexibility and guidance on withdrawal options.
Understanding SIPPs
A SIPP is a pension type that allows you to select your investments from a wide array available on the provider’s platform. This differs from other pensions that offer limited investment choices.
Who Should Consider a SIPP?
A SIPP is an excellent option if you have multiple pensions from various employers. Consolidating these into one provider simplifies tracking your investments. It is also suitable for self-employed individuals who lack employer-sponsored or auto-enrollment pensions.
Typical investment options include:
- Stocks and shares
- Investment trusts
- Government bonds
- Corporate bonds
- Exchange-traded funds (ETFs)
- Managed funds
Most SIPP providers also allow you to open a stocks and shares ISA and a general investment account, further simplifying the management of your investments. Alternatively, you can invest in an ISA with one provider and a SIPP with another.
How SIPPs Operate
Opening and contributing to a SIPP is similar to other accounts like ISAs or general investment accounts. The government provides tax relief on SIPP contributions to encourage retirement savings.
SIPPs function like defined contribution pensions. Your retirement fund depends on your total contributions, investment performance, provider fees, and your withdrawal strategy.
Unlike defined benefit pensions, which are based on your years of service and final salary, SIPPs offer more control over your retirement savings.
SIPP Tax Relief
Most individuals receive tax relief on pension contributions. SIPP providers claim this relief through a process called relief at source, typically at the basic rate of 20% income tax. Higher-rate taxpayers may claim additional relief through self-assessment.
For example, a higher-rate taxpayer earning £90,000 who contributes £20,000 to their SIPP in a tax year would receive £4,000 in automatic tax relief and potentially another £4,000 through self-assessment, reducing their net contribution to £12,000.
Contribution Limits
There is no limit to the amount you can contribute to a SIPP, but there are caps on the contributions eligible for tax relief. Exceeding these limits may result in a tax charge.
- The annual allowance limits tax-relieved contributions to £60,000 or 100% of your earnings, whichever is lower.
- Higher earners may have a reduced annual allowance, which decreases by £1 for every £2 earned above £260,000, down to a minimum of £10,000.
Investing in Your SIPP
SIPP providers allow you to set up regular investments or make lump-sum contributions. Regular investments are automatically allocated to your chosen investment every month, helping to build a savings habit and smooth out market fluctuations.
The flexibility to choose your investments is a significant advantage of SIPPs. You can search for investments through your online account and allocate funds accordingly. Most platforms offer tools, guides, and research to assist in investment decisions.
Investment Types
- Stocks and shares
- Investment trusts
- Government bonds
- Corporate bonds
- Exchange-traded funds (ETFs)
- Managed funds
Accessing Your SIPP
You cannot access SIPP funds until reaching the minimum retirement age, which is currently 55, increasing to 57 in April 2028.
Withdrawal Options
- Tax-free lump sum: You can withdraw 25% of your pension tax-free, up to the lump sum allowance of £268,275. The remaining amount is taxable as income.
- Lump sum withdrawals: Uncrystallised funds pension lump sums (UFPLS) allow 25% tax-free, with the remainder subject to income tax.
- Drawdown: Move money into drawdown to withdraw up to 25% tax-free and receive regular payments or additional lump sums, which are taxed as earnings.
- Annuity: Purchase an annuity for a guaranteed retirement income. SIPP providers typically do not offer annuities directly.
Once you begin withdrawing taxable funds from your defined contribution pension flexibly, tax relief is limited to £10,000 of annual contributions.
Accessing your pension is a significant financial decision. Ensure your funds last through retirement and seek financial advice.
The Lump Sum Allowance (LSA)
The LSA replaced the lifetime allowance, which was abolished in April 2024. The LSA limits the tax-free withdrawal from all your pension pots to £268,275 if the total value exceeds £1,073,100.
Projecting Your Pension Income
In defined contribution schemes like SIPPs, retirement income depends on your contributions, investment performance, and withdrawal strategy.
Include the state pension in your projections, but note that the eligibility age is higher than the minimum retirement age. Plan accordingly to ensure sufficient funds for early retirement.