If a workplace pension is a set menu, a SIPP is the full buffet. A Self-Invested Personal Pension gives you the widest investment choice of any pension wrapper. Individual shares, ETFs, investment trusts, bonds, commercial property, and (since October 2025) crypto ETNs. You’re in the driving seat.
Whether that’s a good thing depends entirely on whether you know how to drive.
What Is a SIPP?
A SIPP (Self-Invested Personal Pension) is a personal pension that gives you control over how your money is invested. You choose the provider, open the account, decide what to invest in, and manage (or outsource) the decisions.
It has exactly the same tax treatment as any other pension:
- Tax relief on contributions (20%, 40%, or 45%)
- Tax-free growth inside the wrapper
- 25% tax-free lump sum at retirement
- Remaining 75% taxed as income in drawdown
- Annual allowance of 60,000 (same as workplace)
- Accessible from age 55 (57 from April 2028)
The difference is what you can invest in and how much control you have.
SIPP vs Workplace Pension
| Feature | Workplace Pension | SIPP |
|---|---|---|
| Who sets it up | Employer | You |
| Fund range | Varies (5-6000 funds) | Full (thousands of funds, shares, ETFs, bonds, property) |
| Employer contributions | Yes (auto-enrolment) | Rarely (unless arranged) |
| Investment control | Minimal in Master Trust | |
| Some in Group Personal Pension | Maximum | |
| Individual shares | Rarely | Yes |
| Commercial property | No | Yes (full SIPPs) |
| Charges | 0.10-0.75% (capped for AE) | Varies (see below) |
| Regulated by | TPR for Master Trust & FCA for Group Personal Pension | FCA |
| Best for | Default auto-enrolment | Experienced investors, consolidation |
An IPP (Individual Personal Pension) is essentially a SIPP with fewer features. It’s a personal pension with a moderate fund range but without access to shares, ETFs, or commercial property. The line between IPPs and SIPPs has blurred, with many providers now offering SIPP-level features at IPP prices.
What Can You Hold in a SIPP?
This is the main attraction. A full SIPP can hold:
- Funds (OEICs and Unit Trusts) – thousands available. Passive trackers, active funds, multi-asset, sector-specific
- ETFs – exchange-traded funds on recognised exchanges
- Investment Trusts – listed on the stock exchange
- Individual Shares – UK and international shares on recognised exchanges (including AIM)
- Government and Corporate Bonds – gilts, treasuries, investment grade and high yield
- Commercial Property – offices, warehouses, shops (full SIPPs only, with borrowing up to 50%)
- Crypto ETNs – from October 2025 (listed on UK recognised exchanges)
- Long-Term Asset Funds (LTAFs) – private equity, infrastructure, real estate (specialist)
What you CANNOT hold:
- Residential property (HMRC imposes a tax charge of up to 55%)
- Tangible moveable property (wine, art, classic cars, gold bars)
- Directly held cryptocurrency (only through regulated ETNs)
SIPP Charges
SIPP charges vary significantly. The cheapest SIPPs are as affordable as workplace pensions. The most expensive ones are not.
Percentage-based SIPPs:
- Hargreaves Lansdown: 0.45% on funds (capped for shares at 200/year in a SIPP)
- AJ Bell: 0.25% (funds), capped for shares, plus 120/year SIPP fee
- Fidelity: 0.35% on funds
Flat-fee SIPPs:
- Interactive Investor: 72-240/year depending on plan
- Vanguard: 0.15% capped at 375/year
- InvestEngine: 0.25% (managed), free (DIY ETF-only)
For larger pots (100,000+), flat-fee SIPPs are almost always cheaper. A 500,000 SIPP at 0.45% costs 2,250/year. The same pot at Interactive Investor costs 240/year. That’s a 2,010/year difference, every year, compounding.
Who Should Have a SIPP?
- Anyone wanting more investment choice than their workplace pension offers
- Self-employed people who don’t have a workplace pension
- People consolidating multiple old pension pots into one place
- Experienced investors who want to select their own funds or buy individual shares
- Higher earners looking for tax-efficient retirement savings alongside workplace contributions
- Business owners wanting to buy commercial property through their pension
Who doesn’t need a SIPP:
- If you’re happy with your workplace default fund and don’t want to think about investments, a SIPP is more control than you need
- If your employer’s contribution only goes to the workplace scheme, prioritise that first (always capture the employer match before funding a SIPP)
Consolidating Old Pensions into a SIPP
If you’ve had multiple jobs, you likely have multiple pension pots scattered across different providers. A SIPP is an excellent consolidation point.
Benefits:
- One login, one dashboard, one view of your total pension wealth
- Potentially lower charges than multiple old schemes
- Better fund choices and investment options
- Easier to manage and plan for retirement
Before transferring, always check:
- Guaranteed annuity rates (could be worth thousands and are lost on transfer)
- Protected tax-free cash above 25%
- Protected retirement age of 50 or 55
- Employer contributions still being paid in
- Exit penalties on legacy products
- With-profits MVRs that could reduce your transfer value
If any of these apply, get advice before transferring. The value of the guarantee may exceed the benefit of consolidation.
Drawdown from a SIPP
From age 55, rising to 57, you can access your SIPP through flexi-access drawdown:
- Tax-free lump sum: take 25% of your pot (or part of it) completely tax-free. Capped at 268,275 across all pensions
- Drawdown income: move the remaining 75% into drawdown and take income as and when you choose. Taxed as income at your marginal rate
- Your money stays invested throughout. No requirement to buy an annuity
- Phased drawdown: crystallise your pension in stages, taking 25% tax-free from each tranche. This can be more tax-efficient than taking everything at once
The risk: you can run out of money. Drawdown puts the investment risk and longevity risk on you. Taking too much too early is the number one drawdown mistake.
The Bottom Line
A SIPP is the most powerful pension vehicle available to UK investors. Maximum investment choice, full control, and the same generous tax treatment as any other pension.
But with power comes responsibility. More choice means more opportunities to get it right, and more opportunities to get it wrong. If you’re going to run your own pension, make sure you know what you’re doing, or work with an adviser who does.
For most people, the right approach is: maximise your workplace pension first (capture the employer match), then use a SIPP for additional contributions or consolidation. The SIPP is the cherry on top, not the whole cake.