Pensions

What Is a SIPP? Guide to Self Invested Personal Pensions

Jennifer Birtles 20th Mar 2025 No Comments

Reading Time: 3 minutes

A Self-Invested Personal Pension (SIPP) is a powerful, tax-efficient retirement savings account that puts you in control of your investments. Unlike traditional workplace pensions, a SIPP is self-funded, meaning you decide how much to contribute and where to invest your money.

If you’re looking for a flexible way to build your retirement pot while enjoying tax advantages, a SIPP could be a great option. In this guide, we’ll cover everything you need to know about SIPPs, including how they work, who they’re best suited for, and how to start investing.

What is a SIPP?

A Self-Invested Personal Pension (SIPP) is a type of pension wrapper that allows individuals to manage their own retirement investments. Unlike traditional personal pensions, which are often restricted to a limited selection of funds, SIPPs offer a much broader range of investment choices. This flexibility can potentially lead to greater returns over the long term—if managed wisely.

Types of Investments Allowed in a SIPP

SIPPs give investors access to a wide variety of assets, including:

Stocks and Shares: Invest in individual company shares.
Unit Trusts & Open-Ended Investment Companies (OEICs): Professionally managed investment funds.
Investment Trusts: Pooled investments that are traded like shares.
Corporate & Government Bonds: Fixed-income investments.
Cash: Hold cash within your SIPP for flexibility.
Commercial Property: Invest in business properties, such as offices or warehouses.

The ability to diversify across different asset types makes SIPPs an attractive choice for experienced investors looking to build a well-balanced pension portfolio.

Is a SIPP Right for You?

SIPPs are best suited for individuals who:

Have experience with investing and are comfortable making financial decisions.
Want greater control over their retirement savings.
Are willing to actively manage their investments or work with an advisor.
Have a sizable pension pot or plan to make significant contributions.

Things to Consider Before Opening a SIPP

While SIPPs offer great flexibility, they come with responsibilities:

Investment risk: Your retirement savings depend on how well your investments perform.
Time commitment: You’ll need to review and manage your investments regularly.
Fees & charges: SIPPs can have higher costs than traditional pensions, so it’s essential to compare providers.

If you prefer a hands-off approach, a traditional personal pension with professionally managed funds might be a better fit.

How to Start Investing in a SIPP

Setting up and managing a SIPP isn’t as complicated as it sounds. Here’s how to get started:

1. Choose a SIPP Provider

There are many SIPP providers available, each with different fees and features. Some top providers include:

SIPP Provider	Anual Management Fees	Admin Fees	Minimum Deposit
Invest Engine	0.25% (for managed portfolios only)	Zero	£100	Learn More
Interactive Investor	£5.99 monthly fee	Included in the £5.99 monthly fee	£10,000	Learn More
Hargreaves Lansdown	From 0.1%	From £0	£100	Learn More

When choosing a provider, compare these key fees:

Setup Fees: Can range from £0 to £500.
Annual Management Charges: Either a percentage of assets or a flat fee.
Dealing Charges: Fees for buying and selling investments.
Admin Fees: Costs for transferring, withdrawing, or closing your SIPP.

2. Select Your Investments

Once your SIPP is open, it’s time to choose where to invest your money. Your provider will offer a range of funds, stocks, and other investment options. Be sure to diversify to reduce risk and aim for long-term growth.

3. Manage and Review Your SIPP

Regularly reviewing your SIPP is crucial to ensure your investments are performing well. If certain assets underperform, consider reallocating your funds to maximize returns.

Alternative Options to Consider

A SIPP isn’t the only way to save for retirement. Here are some alternatives:

ISAs

A tax-efficient way to invest in stocks and shares.
Offers investment flexibility but doesn’t provide pension tax relief.
No requirement to lock away funds until retirement.

Read: Everything you need to know about stocks and shares ISAs

Personal Pension Schemes

A traditional pension managed by a provider.
Less flexibility but simpler for those who don’t want to self-manage investments.

Stakeholder Pensions

Designed for accessibility with capped charges.
Limited investment options but a good choice for low-maintenance savers.

If you’re unsure which option is best for you, speaking with a financial advisor can help tailor a retirement strategy that suits your needs.

Final Thoughts

A SIPP is a great option for those who want full control over their pension investments. With a broad range of investment choices and tax benefits, it can be an effective way to grow your retirement savings—provided you’re willing to put in the time and effort to manage it wisely.

If you’re new to investing, take the time to research and seek professional advice before making any decisions. With the right approach, a SIPP can be a powerful tool in securing your financial future.

Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice. Always conduct your own research and consult a professional advisor before making any financial decisions.