Best SIPP Accounts
Find the best SIPP (Self-Invested Personal Pension) Accounts
Updated: 17th April 2021
- Full Price Comparison Table (on its way soon!)
Do You Need A Pension?
The state pension is unlikely to be enough for future retirees. The direction of travel has been for the government to raise the retirement age and place a greater emphasis on the importance of workplace pensions, with initiatives such as auto enrolment.
The state pension may not even exist in its current form by the time many of today’s workers make it to retirement. You will need to take control of your own financial future.
Do you want your savings to grow over the years to a level where you can retire in comfort? Then you will likely need some kind of personal pension. The main advantage of a pension is the tax relief, which comes in 2 forms:
- Any payments you make into your pension will be topped up by the government by 25% for basic rate taxpayers, and higher rate taxpayers can increase this top-up to an effective 67% via their self-assessment tax return. Additional rate taxpayers can increase that effective top-up to 82%! That is a huge gain upfront before we even look at investment gains!
- The investment gains you make within the pension are mostly tax-free.
However, when you draw down on your pension in retirement (when you use it to pay you an income), that income will be taxed just like income from a job would be (though you are entitled to take up to a 25% tax-free lump sum first).
Types Of Pension
SIPPs are just one type of pension, of which there are many. Some common types are:
1) Workplace or Employer’s Pensions (Defined Contribution)
These are offered to employees by their employer, and the employer has to contribute something towards your pension alongside what you pay in.
By law, every employee is auto enrolled into one of these, unless they opt out. As of 6 April 2019, the minimum employer contribution level is 3% of qualifying earnings.
A SIPP is another contribution style pension similar to a workplace pension, but you are in total control, rather than the HR department at your job.
You can consolidate all past workplace pensions (and other pensions) into a single SIPP, and pick exactly what investments the money gets invested in.
3) Defined Benefit Pension
What the Baby-Boomer generation recognised as a pension. Now exceedingly rare, this “final salary” style pension is still offered to some in the public sector, where your employer will pay for your retirement – though you may also choose or be asked to contribute.
Your pension income is set in stone and doesn’t depend on investment returns. If you are lucky enough to be offered this type of pension by your employer, you should consider yourself blessed!
Why Use A SIPP?
A SIPP is very useful tool to consolidate your old workplace pensions from previous jobs into one place. Rather than existing on paper statements lost in your attic, your total pension balance can be on screen in one place in an online account.
The next great benefit of a SIPP is control. In a workplace pension, you are usually assigned a “one-size-fits-nobody” portfolio of funds, indirectly chosen by your employer which will likely neither match your risk profile or the reality of the world markets.
In a SIPP you can choose to invest your pension money as you choose. If you want to invest more heavily into America, you can. If you want to add exposure to gold or silver into your pension, that is your choice – and so on.
Should I Use My Employer’s Pension Scheme?
Probably. But only the most recent, active Workplace Pension that you hold with your current employer. This is because you are still adding to this scheme and your employer is matching your contributions.
This free cash is not to be sniffed at, but only pay up to the level that the employer matches! Any excess money should likely go into a SIPP (or ISA for alternative retirement strategies).
As for your non-active workplace pensions from previous jobs, these are likely invested in underperforming stocks and bonds favoured by fund managers, but not exactly aligned to your best interests. Rescue these old pots by putting them to work in a SIPP!
How Much Should I Put In My SIPP?
A good retirement strategy is to use SIPPs alongside ISAs to create a tax efficient balance of retirement savings and accessibility. If your aim is to retire in your 50s or later, it likely makes sense to regularly invest more money into your SIPP than into your ISA.
Check here to find out when your state pension retirement age is expected to be. You can typically access private pensions 10 years in advance of this date (for example, if your state pension age is 68, you might expect to access your private pensions from age 58). Though a lot could change in the law between now and when you retire!
If you plan to retire in your 30s or 40s, you might want to invest purely in a Stocks & Shares ISA, and have your SIPP simply hold and grow your old workplace pension balances.
Personal pensions can only be accessed at a certain age, which currently ranges from 55-58 for people of non-pension age today, so to bridge the gap, those choosing to retire earlier than this will also need some accessible investments, which are best placed in an ISA.
As for how much you can put into a SIPP, there is technically no upper limit. But there are limits on the tax relief you can get:
Limits For Tax Relief
The Earnings Limit
You get tax relief on contributions (the additional top up of 25%, 67% or 82%) only up to the level of your annual earnings. Say your salary is £30,000 – if you deposited £50,000 into your pension, you’d get tax relief up to £30,000 (i.e. £24,000 plus 25% relief as a basic rate taxpayer).
The Annual Limit
Your tax-relief qualifying contributions are also capped at £40,000 each tax year, plus any unused Annual Limit from the last 3 years. Say you hadn’t invested anything into your pension over the last 3 years – you could in theory invest £160,000 (£40,000, which includes top up from tax reliefs, x 4 years) in the current year and get the full tax relief – dependant on the Earnings Limit above.
The Lifetime Limit
The ‘lifetime allowance’ has gone up to £1,073,100 for 2020/21 and is to be frozen at this level until 2026. This means if your total pension pot is over this amount, you’d face a tax charge.
How To Choose A SIPP?
When choosing an SIPP provider, you want to look into these key points: Effort, Your Investing Knowledge, Cost, and Choice.
Effort & Your Investing Knowledge
You may be happy with the manner in which you’ve managed your pensions up until now – that is, doing nothing. Or you may not have the first clue about how to pick a suitable investment portfolio.
In these cases, you may be suited to a SIPP from a Robo-Investing provider. This type of provider will automatically ask you a series of questions when you open a SIPP account online, and will provide you with a ready made portfolio based on your requirements and risk profile.
Over such a long period of time as a retirement plan, any fees you are charged will compound on top of each other and create a serious drag on your pension’s performance if you let them.
As such, the fees should be as small as possible, preferably less than 1% and ideally much lower.
The SIPP providers with the lowest fees are invariably the ones with the smallest choice, and that don’t hold your hand through the investing process.
Fees to look out for are trading fees when you buy and sell investments, foreign exchange (FX) fees on investments denominated in foreign currencies, and annual fees to service both the SIPP (the Platform fee plus any specific SIPP fee) and any funds you own within it (known as the Ongoing Charges Figure or OCF).
One of the most important decisions when choosing a SIPP is that you need to make sure it offers what you want to invest in.
Some platforms have a huge range of funds, ETFs, international and UK stocks, and commodities like Oil and Gold. These tend to be the more expensive providers.
The cheapest platforms tend to only offer some funds, a few ETFs, and maybe a limited range of stocks.
Our Top Pick SIPP Providers
Top Robo-Investing SIPP
For people who want all the hard work of setting up and managing their pension done for them. Nutmeg builds and manages a diversified portfolio for you, using technology to keep charges low and the investment goals personal to you. The portfolios are constructed from diversified ETFs.
Nutmeg will ask you a series of questions and assign you to a suitable portfolio based on your attitude to risk.
It has four different plans to choose from, with no hidden fees – the cheapest, the “Fixed Allocation” plan, costs 0.45% up to £100k, and 0.25% beyond. There is also a fund fee (average 0.19%), and finally a market spread (average 0.05%).
Nutmeg also offer a Stocks & Shares ISA account which has the same fee structure and investment options as the SIPP range.
For new investors Nutmeg will reduce the platform fee to 0% for 6 months when you sign up via the link below.
Platform Charge: For the Fixed Allocation plan fees are 0.45% on the first £100,000, then 0.25%
Regular (monthly) Investing Service: FREE
Other Fees: Fund fees average 0.19% and Market Spread average 0.05% (on Fixed Allocation plan)
Transfer Out fee: Free
Bonus Period: First 6 months without platform fees when you sign up via Money Unshackled
Low Fee, Low Choice Platform
The Vanguard SIPP is perhaps the cheapest on the market and is also operated by one of the most trusted investment outfits in the world.
The account fee is just 0.15% and capped at £375 per year.
The downside is that you can only invest in a select few Vanguard products, which are all funds and ETFs. Ironically you can invest in a wider range of Vanguard funds on other platforms. Luckily, the ones available through Vanguard are amongst the best on the market anyway, but you are limited to bonds and equities that represent geographical areas. There are no commodities or sector specific funds available in this SIPP.
Vanguard also offers funds called the Target Retirement funds, a great retirement planning innovation that de-risks your portfolio for you over time. While these are also available on other SIPP platforms, Vanguard’s low account fee means they are cheapest to buy here.
Any regular contributions must be at least £100, and any lump sum deposits at least £500.
Platform Charge: 0.15%, capped at £375 per year
Regular (monthly) Investing Service: FREE, but £100 minimum deposits
Lump Sum Investing: FREE, but £500 minimum deposits
Other Fees: Fund fees average 0.20%
Transfer Out fee: FREE
Top Wide-Range Percentage Fee SIPP
AJ Bell Youinvest
The low platform fee of up to 0.25% on funds might make this provider of interest for investors with smaller investment pots; or even large pots when investing in shares, ETFs and investment trusts – with these the SIPP platform fee is capped at £10 per month.
The wide range of investment options will give investors plenty of choice. AJ Bell Youinvest have also recognised that choice can often be overwhelming, so you can choose from the AJ Bell Favourite funds list if you wish. Not only that but they also offer ready-made portfolios if you need help in getting started.
Important information: Capital at risk. AJ Bell Youinvest doesn’t offer advice.
Platform Charge: 0.25% on the first £250,000 for funds – capped at £10 per month for non-fund holdings (see table below for full pricing)
Regular (monthly) Investing Service: £1.50 per deal
Fund dealing: £1.50 per deal
Share and ETF dealing (on-line): £9.95 per deal
Transfer Out fee: £9.95 per holding (no charge if in cash)
Range: Over 2,000 funds, plus UK and global stocks, Investment Trusts, and ETFs
Top Wide-Range Fixed Fee SIPP
For the wealthier investor – this is a comprehensive platform with a huge investment range. Interactive Investor has a flat platform fee, so is more suited to those who have tens of thousands of pounds worth of stocks and/or funds in their pension but is expensive if your pot is just a grand or two.
Interactive Investor charges a £9.99 fixed monthly fee for their lowest cost service plan (other plans available) which gives you access to all investments on the platform, plus the ability to open an ISA and Trading Account. The SIPP fee is £10 a month extra – total cost to have a SIPP is therefore a fixed £19.99 a month.
There are no trading fees for their regular (monthly) investing service, and every investor gets 1 free trade a month that you can use at any time in the month.
Special Offer – while the offer lasts, no SIPP fee shall be payable on all new ii SIPP accounts opened on or after 1 October 2020 for six calendar months.
Platform Charge: £9.99/month for ‘Investor’ Plan
SIPP Fee: an additional £10/month
Regular (monthly) Investing Service: FREE
Fund & ETF dealing: £7.99
Share dealing: £7.99 UK and US
Transfer Out fee: N/A
Range: Access 40,000+ UK and global stocks and 3,000+ funds, plus Investment Trusts and ETFs
Full Price Comparison Table (Best SIPP Accounts)
So you know…
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