What is a SIPP?
Your complete guide to Self-Invested Personal Pensions
Understanding SIPPs
A Self-Invested Personal Pension (SIPP) is a type of personal pension that gives you complete control over your retirement savings. Unlike traditional workplace pensions, a SIPP allows you to choose and manage your own investments, from individual stocks and bonds to commercial property.
Key Benefits
Get up to 45% tax relief on your contributions
Invest in stocks, bonds, funds, and commercial property
No UK income tax or capital gains tax on growth
Access your pension flexibly from age 55 (rising to 57 in 2028)
How SIPPs Work
Contribution
You contribute to your SIPP and receive tax relief from the government. For basic rate taxpayers, every £80 you contribute becomes £100 in your pension. Higher rate taxpayers can claim additional relief through their tax return.
Investment
Your money is invested according to your choices. You can select from thousands of investments including UK and international stocks, bonds, funds, investment trusts, and even commercial property.
Withdrawal
From age 55 (rising to 57 in 2028), you can access your pension flexibly. Typically, 25% can be taken tax-free, with the remainder taxed as income at your marginal rate.
SIPP vs Other Pensions
| Feature | SIPP | Workplace Pension | Personal Pension |
|---|---|---|---|
| Investment Choice | Wide range including stocks, funds, commercial property | Limited to provider's fund selection | Limited to provider's fund selection |
| Employer Contributions | Possible but not guaranteed | Yes, minimum 3% of qualifying earnings | Unlikely |
| Fees | Varies by provider, can be higher | Typically lower, often subsidized | Moderate, varies by provider |
| Flexibility | High | Low to Moderate | Moderate |
SIPP Tax Relief Explained
£80 contribution becomes £100
£60 contribution becomes £100
£55 contribution becomes £100
Annual Allowance
You can contribute up to £60,000 per year (or 100% of your earnings if lower) and still receive tax relief. There's also a lifetime allowance of £1,073,100 (as of 2026/27).
Is a SIPP Right for You?
Consider a SIPP If:
- ✓You're comfortable making your own investment decisions
- ✓You want a wider range of investment options
- ✓You have experience with investing
- ✓You want to consolidate multiple pension pots
- ✓You're self-employed or don't have a workplace pension
Consider Alternatives If:
- ✗You prefer a hands-off approach to investing
- ✗You have a good workplace pension with employer contributions
- ✗You're new to investing and want guidance
- ✗You're concerned about higher fees
- ✗You want guaranteed returns
Key Considerations
Long-Term Commitment
Pensions are designed for long-term saving. The earlier you start contributing, the more time your investments have to grow through compound interest.
Risk and Reward
With greater investment choice comes greater responsibility. The value of investments can go down as well as up, and you could get back less than you invest.
Diversification
It's important to spread your investments across different asset classes and geographical regions to manage risk effectively.
Fees Impact
SIPP fees can significantly impact your returns over time. Compare providers carefully and consider the impact of fees on your long-term growth.
SIPP Investment Options
Stocks & Shares
Individual company shares and exchange-traded funds (ETFs)
Investment Funds
Unit trusts, OEICs, and investment trusts
Commercial Property
Direct property investment and property funds
Government & Corporate Bonds
Gilts and corporate bonds for fixed income
Alternative Investments
Infrastructure, private equity, and hedge funds
Cash & Deposits
Cash deposits and money market funds for stability
Related Guides
Learn more about retirement planning and tax-efficient investing:
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