Best SIPP Providers 2023

There is no limit on the amount that you can contribute to a SIPP every year, however, there is a limit on the amount you can contribute and receive tax relief on. This is known as the annual allowance and it’s usually 100% of your taxable earnings or £40,000, whichever is lower. This annual allowance applies across all of your pension accounts and includes the value of any tax relief that is added to the contributions. Once you have made a taxable withdrawal from your SIPP, the annual allowance goes down to £4,000. This is known as the money purchase annual allowance. For higher earners, the rules around pension contributions are different. Higher earners face a tapered annual allowance. With a Junior SIPP, you can contribute up to £2,880 per year. Contributions into a SIPP pension can come from yourself, an employer, or someone else such as a relative or friend.

To open and pay into a SIPP, you must be aged between 18 and 75 and either a UK resident or a Crown employee (or married to or in a civil partnership with a Crown employee). Those under the age of 18 are eligible for a Junior SIPP.

You can have a SIPP alongside other pension accounts such as workplace pension schemes as well as other investment accounts such as ISAs. You’re allowed to have multiple SIPP accounts if you wish to.

Opening a SIPP is generally a straightforward process. Usually, you can open one online through a provider’s website. When you open a SIPP, you’ll need to fund your account. There are two ways to do this. One way is to make an initial contribution. The minimum investment for a SIPP varies among providers, however, in many cases, it is very low. The minimum SIPP investment with Hargreaves Lansdown, for example, is just £100.

The other way to fund your account is to transfer an old pension into your new account. To transfer an old pension, you will need to provide your new provider with a few details such as the name of your old provider, the policy type, your policy number, and the approximate value of your old pension.

When you contribute to a SIPP, the government provides you with tax relief on your contributions. When you receive tax relief, some of your money that would have gone to the government as tax goes towards your pension instead.

Once your SIPP is opened and funded, you can invest your money. How you invest is down to you. With a SIPP, you have full control over your investments. Most SIPP providers offer a wide range of investment options including UK and international shares, investment trusts, funds, exchange-traded funds (ETFs), and bonds. Some providers, however, offer more limited options. Most providers allow you to keep your SIPP savings in cash if you want to.

If you move overseas, it may still be possible to contribute to a SIPP. However, the rules around this are quite complex and depend on whether you still have taxable UK income and for how long you have been abroad. It’s a good idea to check these rules before you move abroad.

Because a SIPP is a retirement account, you cannot access money in a SIPP until the age of 55. In 2028, this will rise to 57. Once you turn 55, you can make withdrawals from your SIPP, however, you can only withdraw 25% of your SIPP savings tax-free. Anything above this will be added to your income and taxed at your normal rate.

Most SIPP providers do not allow you to withdraw money before the age of 55. If they do, they will likely charge you a large fee for doing so. Additionally, HMRC will tax the funds withdrawn at 55%.

Under current law you must be aged 55 or over to withdraw money from a pension, except under very special circumstances such as ill health. From 2028 the age limit increases to 57 years.

Yes. Investing with a regulated SIPP provider is generally very safe as UK regulators require SIPP providers to keep clients’ assets separate from their own money. This means that the assets cannot be taken by creditors if the firm goes bust. A SIPP trustee is an organisation that holds assets in a trust for the beneficiaries of the account. They are responsible for ensuring that the account holder’s investments are secure. A SIPP Administrator is an entity that is responsible for ensuring that a SIPP is run properly.

If a regulated SIPP provider fails, you will be covered by the Financial Services Compensation Scheme (FSCS). This protects up to £85,000 of your investment deposit per person per provider.

It’s important to understand, however, that investments within a SIPP come with risk. The FSCS won’t protect you if your SIPP if the  investments fall in value.

Further reading: Can you switch SIPP administrators?

Many people are often interested in finding out which SIPPs offer the best returns. Comparing the performance of different SIPP accounts is difficult, however. This is because most SIPPs offer a wide range of investments and you are in charge of investing your money. Additionally, the returns from investments within a SIPP such as shares, funds, and ETFs are uncertain and past performance is not an indicator of future performance.

If your goal is to generate high returns from your SIPP, the key is to focus on the range of investments offered by the SIPP, as well as the fee structure, as these factors are the main determinants of a SIPP’s return potential.

No, Vanguard do not have a SIPP account option, they are a personal pension provider.

Vanguard is an investment management company that offers a wide range of low-cost index funds and ETFs and has around 30 million customers worldwide. With the Vanguard SIPP, investors have access to over 75 individual funds including ETFs, active funds, and index funds.

Vanguard’s personal pension has a low account fee of just 0.15% per year, capped at £375 per year. However, investors also have to pay fund management costs of around 0.20% per year on average.

One downside to this personal pension versus a SIPP accounts is that it offers fewer investment options than some other SIPPs do. For example, with Vanguard you cannot invest in individual shares.

Here is how Vanguard’s SIPP compares to Hargreaves Lansdown SIPP.

The big advantage of saving into a SIPP when you’re self-employed is that contributions can be treated as a business expense. This means that saving into a SIPP can be very tax-effective. So, many SIPPs are well suited to those who are self-employed.

Those who have the time to manage and monitor their pension savings may want to consider Hargreaves Lansdown’s SIPP. Hargreaves Lansdown is the largest investment platform in the UK with 1.5 million clients. This SIPP offers access to a vast range of investments including domestic and international equities, over 3,000 funds, bonds, and more. One advantage of this platform is that it offers plenty of research and investment tools to help you make investment decisions. Another advantage is that the customer service is very strong. On the downside, fees are higher than those of some other SIPP providers.

Those who don’t want the hassle of managing their own money may want to go with a managed provider such as Wealthify. Wealthify is a robo advisor that offers a managed pension product. With Wealthify, you choose an investment style based on your risk tolerance. The advantage of investing with Wealthify is that it’s very easy to set up a pension. One downside, however, is that there are only a few investment options to choose from, for example, you cannot invest in individual shares.

Investing in a SIPP is generally a straightforward process.

Before you can invest in a SIPP, you’ll need to open and fund an account. This can usually be done online. You can fund an account by making an initial contribution or by transferring your old pension accounts to your new SIPP.

When funding your SIPP, it’s important to remember that the money in a SIPP cannot be touched until you turn 55. So, you shouldn’t invest money you are likely to need before then.

Once your account is open and funded you will be able to invest your money. Your investment options will depend on the provider you choose. Some providers such as Hargreaves Lansdown, AJ Bell Youinvest, and Interactive Investor offer a vast range of investments including domestic and international shares, funds, investment trusts, ETFs, bonds, and more. Others, such as Vanguard and Wealthify, offer fewer investment options.

When investing in a SIPP, it’s important to consider your financial goals and risk tolerance. Those with a lower tolerance for risk should consider investing in lower risk investments such as cautious funds.

The best investments to buy for your SIPP are funds and large cap stocks. However, the best SIPP investments for you will depend on your personal financial goals, your risk tolerance, and the amount of time you have to devote to investment research. SIPP investment opportunities are broad and varied and include things like commercial property, shares, funds and ETFs. Here’s a rundown of considerations to think about when investing in a SIPP.

Further reading: Most popular investments for UK investors

Those who have time for investment research may want to consider investing in individual shares. This approach to investing has two main advantages. Firstly, you can potentially outperform the broader stock market if you pick the right stocks. Secondly, you can potentially save on fees. Generally speaking, over the long term, it’s cheaper to own a portfolio of individual shares than a portfolio of funds. On the downside, however, this approach is riskier than investing in funds or ETFs. When you invest in individual shares, you face stock-specific risk. It’s important to build a diversified portfolio to minimise these risks.

Those that do not have time for investment research or would prefer to outsource investment management to others may want to consider equity funds. Funds offer diversified exposure to the stock market which means that they are less risky than investing in individual shares. One example of a fund is the Fundsmith Equity fund. This is a global equity fund. This particular fund has been one of the most popular funds in the UK for many years now due to its strong performance track record. Past performance is not an indicator of future performance, however.

Another option to consider is investment trusts. These are like funds in that they provide diversified exposure to stocks. However, unlike regular funds, they are traded on the stock market. This means you can buy and sell them like regular shares. Two of the most popular investment trusts include the City of London Investment Trust, which aims to provide long-term growth in income and capital, and Scottish Mortgage Investment Trust, which aims to provide long-term growth.

Of course, there are many other investment options to consider. Most SIPPs enable you to invest in shares, funds, ETFs, commodities, bonds, and more. The key is to build a portfolio that is suited to your requirements and risk profile.

You can hold cash with most SIPP providers, however, as with a regular bank account, the returns on cash are likely to be low. Those looking for low-risk investments may want to consider cautious funds such as Vanguard’s LifeStrategy 20% Equity fund.

SIPPs require a certain amount of investment knowledge and time commitment. Investors must be willing to research the asset classes in which they invest and make important decisions about how to allocate their money, or they will need an adviser who can do so on their behalf. Markets can be volatile and making the wrong decision at the wrong time can wipe out a pension pot just as the saver reaches retirement. Savers must be sure they have the appropriate risk appetite and a full understanding of SIPPs before investing. If you already have a company pension, it may make more sense to increase contributions to that instead of setting up a SIPP. If you are a confident investor, who wants to take control of your retirement savings and consolidate other plans, a SIPP could be suitable.

Usually SIPPs are execution only. This means that unless the investor sought independent financial advice when allocating their money, the risks lie solely with them. Certainly in the beginning, it can be sensible to invest via a unit or investment trust rather than buying shares directly since a professional asset manager will make the stock selection decisions on your behalf. The SIPP provider is responsible for administering the plan and ensuring your money ends up as intended.

In an execution only SIPP, the provider will offer no advice on where to invest and savers might need support from an independent adviser. Full SIPPs may include some advice from the provider, while robo advice SIPPs will take all or some investment decisions on the investor’s behalf. There is no obligation to invest in all the asset classes on offer and it makes sense to choose those with which you are familiar.

It is possible to invest ethically within a SIPP. One way to do this is to invest in ethical investing, ESG investing, funds or ETFs. These are now offered by a wide range of SIPP providers including Hargreaves Lansdown, AJ Bell Youinvest, and Interactive Investor.

Some examples of ethical funds include:

• The Fundsmith Sustainable Equity fund. This fund has a similar philosophy to that of Fundsmith Equity but doesn’t invest in businesses in certain sectors such as alcoholic beverages or tobacco.
• The Royal London Sustainable Leaders fund. This fund invests in businesses that are deemed to make a positive contribution to society. It invests predominantly in UK businesses but also has a little bit of exposure to the US and Europe.
• The iShares MSCI World ESG Screened UCITS ETF. This is an ETF that provides exposure to global equities but screens out stocks related to controversial weapons, nuclear weapons, tobacco, thermal coal, oil sands, UN Global Compact violators, and civilian firearms.

If you want to generate good returns from your SIPP, there are three things you need to do:

• Choose superior investments. Of course, this is easier said than done. No one knows how an investment will perform in the future and past performance is not an indicator of future performance. By spending some time on research, however, it may be possible to identify investments with strong long-term growth potential.
• Manage risk carefully. Avoiding big losses is one of the keys to investment success. It’s important to build a diversified portfolio that contains many different assets. This will reduce the risk of suffering big losses.

• Minimise fees. Over time, fees can have a large negative impact on investment returns. You can reduce fees by selecting products with low fees and not trading excessively.

One way is to select a low-cost SIPP. Some SIPPs have lower fees and charges than others.

Another way is to invest in investments that have low fees. ETFs, for example, generally have much lower fees than actively managed funds.

It’s worth noting that on some platforms, some investments attract lower custody fees than others. For example, on platforms such as Hargreaves Lansdown and AJ Bell Youinvest, the annual custody fees for accounts with shares are lower than those for accounts with funds.

A third strategy that can help keep fees low is to minimise trading. Fees from excessive trading can quickly add up.

Tax relief is a reward from the government for saving for retirement. When you contribute to a SIPP, some of your money that would have gone to the government as tax goes to your pension instead.

Tax relief is paid on your pension contributions at the highest rate of income tax you pay.

Tax relief on SIPP withdrawals

There are rules around making a tax-free withdrawal from your SIPP and then making a contribution into the SIPP with that money to claim tax relief. This is known as ‘pension recycling.’ The rules – which are designed to stop the systematic exploitation of pension tax rules to generate artificially high amounts of tax relief – are quite complex. To decide whether your contributions have been significantly increased, HMRC will examine how much you might have contributed to your SIPP if tax-free cash from withdrawals had not been received and compare this to your actual contributions. You can find more information on pension recycling rules.

Yes, most SIPPs will let you transfer pensions in. However not all plans let you take your money out and even if you can transfer, you will likely pay charges. The rules and fees will vary across providers. If you have a final salary (defined benefit) scheme with your employer with a pot of £30,000 or more, you will need the transfer approved by a regulated adviser.

Yes. Most SIPP providers offer access to ETFs, index funds, and other passive investments. These kinds of investments have low fees.

You can use SIPP contributions to reduce your adjusted net income. This can potentially help you avoid Child Benefit tax charges if your income is just above the £50,000 Child Benefit threshold.

There is no limit on the amount that you can pay into a SIPP annually. However, there is a limit on the amount you can contribute and receive tax relief on. This is known as the annual allowance and usually, it is either 100% of your taxable earnings or £40,000, whichever is lower. This limit applies across all your pension accounts and includes the value of any tax relief added to the contributions. Higher earners face a tapered annual allowance.

The Lifetime Allowance (LTA) is the total amount of money you can build up in your pension accounts while still enjoying full tax benefits. If you breach the Lifetime Allowance, you will pay a tax charge on the excess whenever you take income or withdraw a lump sum from your pension, or reach the age of 75 without having taken any benefits. The Lifetime Allowance is currently £1,073,100.

When you die, the remaining value of your SIPP can be passed on to your nominated beneficiaries. You can nominate SIPP beneficiaries by completing a SIPP beneficiary or ‘expression of wishes’ form with your SIPP provider.

Money in a SIPP can normally be passed on free of Inheritance Tax. Any withdrawals the beneficiaries make will usually be tax free if you die before the age of 75. If you die aged 75 or older, any withdrawals made by beneficiaries will be taxed as income.

You can have as many SIPP accounts as you want. However, when you have multiple SIPP accounts, it can be harder to manage your money.

Yes. It is possible to have both a SIPP and a workplace pension. It’s also possible to have a SIPP and a private pension.

You can withdraw a lump sum from the age of 55. However, you can only withdraw 25% of your SIPP tax-free. The rest will be taxed at your normal income tax rate.

If your SIPP provider offers access to tradable instruments such as shares, ETFs, and index funds, then it is possible to trade within a SIPP.

Some providers, such as Saxo Markets, enable you to trade contracts for difference (CFDs) in a SIPP. Trading CFDs is a risky strategy, however, as your losses can exceed the amount traded.

Yes, with a Junior SIPP. SIPPs are available to those aged between 18 and 75. For those under the age of 18, Junior SIPPs are available. With a Junior SIPP, you can contribute up to £2,880 per year and contributions are subject to 20% tax relief. The money is tied up until retirement age.

Another investment option for those under the age of 18 is the Junior stocks and shares ISA. In this account, all investment gains and income are tax-free. The Junior ISA has an annual allowance of £9,000.

It is sometimes possible to borrow against the value of your SIPP. However, not all SIPP providers allow you to do this. Borrowing against a SIPP can be complicated so it’s a good idea to speak to a financial adviser before doing this.

Some SIPP providers offer access to hedge fund investments. One such provider is Hargreaves Lansdown. Through its platform, it’s possible to invest in funds offered by hedge funds such as Odey Asset Management and Man Group.