What is a SIPP?
A SIPP is a type of personal pension that allows you to take greater control over your retirement investments. Like all pensions, it’s a long-term savings plan designed to help you build up a pot of money for your later years - with tax relief applied to your contributions, up to certain limits.
However, what makes a SIPP different from other personal pensions is the range of investment choices available. With a traditional personal pension, you’re usually limited to a few managed funds selected by the provider. With a SIPP, you can choose from a much wider range of assets.
You don’t need to be an expert, but you do need to be comfortable with managing your investments, or working alongside a regulated financial adviser to help guide those decisions.
What Can You Invest in With a SIPP?
SIPPs offer access to a broad menu of investments. Depending on your provider, you might be able to choose from:
Individual company shares listed on recognised stock exchanges
Unit trusts and open-ended investment companies (OEICs)
Investment trusts
Government and corporate bonds
Exchange-traded funds (ETFs)
Cash and cash equivalents
Commercial property, such as offices or warehouses (residential property is not permitted)
The actual investments available will depend on the SIPP provider you choose. Some SIPPs offer ‘full’ investment flexibility, while others offer a more limited range of core funds.
It’s also worth noting that not all providers offer access to commercial property, and those that do often require a significant minimum investment.
What are the Benefits of a SIPP?
There are a number of reasons people choose a SIPP over a more traditional pension product:
Greater Control
SIPPs allow you to build a portfolio that aligns with your personal goals, values, and appetite for risk. You can decide how much risk you are comfortable with and adapt your investments over time as your circumstances change.
Wider Choice
With access to thousands of different funds, shares, and other assets, SIPPs give you far more choice than standard pensions. This can be particularly appealing if you have a specific investment strategy in mind or are looking to diversify your holdings.
Consolidation
Some people use a SIPP to bring together several pensions from different providers. This can make it easier to manage your retirement savings in one place.
Tax Relief
Like other registered pension schemes, SIPPs offer tax benefits on contributions. Basic rate tax relief is usually applied automatically. Higher or additional rate taxpayers can claim further tax relief via their self-assessment tax return, subject to annual and lifetime limits.
What are the Risks?
While SIPPs offer flexibility, they also come with some important considerations:
Investment Risk
Because you are responsible for choosing your own investments, there is a risk that their value could fall. Some types of investment carry higher levels of risk than others. The value of your pension pot is not guaranteed, and you could get back less than you originally invested.
Complexity
SIPPs are generally best suited to people who are confident making investment decisions or working with a professional adviser. They are not usually recommended for people who want a simple, set-and-forget pension solution.
Costs and Charges
SIPPs often involve more costs than standard pensions. You might pay:
Set-up or transfer fees
Annual administration charges
Dealing charges for buying or selling investments
Additional charges for specialist assets, such as commercial property
These charges can add up over time and impact the overall performance of your pension. It’s important to check the full fee structure of any SIPP you are considering.
Regulation and Protections
SIPPs must be provided by FCA-regulated firms, and providers are required to meet certain standards. That said, it’s essential to understand that investment losses are not covered by the Financial Services Compensation Scheme (FSCS). If the provider itself fails, you may be protected up to a certain limit - but not for investment performance.
Who Might a SIPP Be Suitable For?
SIPPs are generally most suitable for:
People who want to be hands-on with their retirement planning
Experienced investors who understand risk and are comfortable choosing investments
Individuals working with a regulated financial adviser
Those with larger pension pots who want to explore specific or tailored investment strategies
For others, a more straightforward personal pension may be more appropriate.
If you're unsure, it's always best to speak to a qualified financial adviser before making any decisions about your pension savings.
Can I Transfer an Existing Pension into a SIPP?
Yes, many people use SIPPs to consolidate multiple pension pots from previous jobs or providers. However, there are important steps to take:
Check whether your current pensions have valuable benefits (such as guaranteed annuity rates) that would be lost on transfer.
Ensure your new SIPP provider accepts transfers and is authorised and regulated by the FCA.
Be clear on any exit fees from your old provider, and any costs involved in setting up the new SIPP.
Again, this is an area where financial advice can be particularly helpful.
Final Thoughts
A Self-Invested Personal Pension can offer greater freedom and control for those who want to take an active role in managing their retirement savings. However, with that freedom comes responsibility - and it’s vital to be clear on the risks and costs involved.
For many, a SIPP can be part of a well-rounded retirement strategy, but it may not be the right choice for everyone.
Need help understanding your pension options? Read more about pensions here:
https://www.ipfinancialadvisers.net/blog
A pension is a long term investment. The fund value may fluctuate and can go down. Your eventual income may depend upon the size of the fund at retirement, future interest rates and tax legislation.
The tax treatment is dependent on individual circumstances and may be subject to change in future.
The value of investments can fall as well as rise, and you may not get back all of your original investment.
Approved by In Partnership FRN 192638 July 2025