Could a Sipp help to boost your retirement savings?

Once the preserve of wealthier, more experienced investors, self-invested personal pensions (Sipps) have broken into the mainstream over the past decade.

Almost one million pension savers a year now open a Sipp, while the total value of assets held within Sipps has risen to around £560bn – nearly a third of all assets held in defined contribution (DC) pensions.

So should you consider opening a DIY pension? Here we explain how a Sipp can give you more control over your retirement savings and how to choose the right company for you.

• Find out more: best Sipps 2025

How Sipps work 

As with other types of DC pension, how much you’ve contributed and how the underlying investments have performed will dictate the final value of your Sipp pot at retirement.

A Sipp is essentially a do-it-yourself pension. Unlike other types of private pensions, you'll be taking on responsibility for choosing and managing your own investments, so you'll need to have the time and confidence to do this.

They have the same tax benefits as other DC pensions: your money can grow free of income tax and capital gains tax, and you’ll get tax relief on your contributions. This means that for every 80p basic-rate taxpayers add to their pension, the government will add a further 20p. 

Higher-rate and additional-rate taxpayers can claim back a further 20p and 25p, respectively. In most cases, you can’t receive tax relief on pension contributions worth more than your annual earnings or £60,000, whichever is lower. 

• Find out more: how much will you need to retire?

Why savers are opting for Sipps

Some 56% of the 2,925 Sipp holders in our March 2025 survey said that they opened a Sipp because they wanted more control of their pension savings, while 45% wanted to boost their pension investments, and 40% wanted access to a wider range of investments.

You can consolidate all your pensions into a Sipp, or hold it alongside any existing workplace schemes; 54% of Sipp holders told us they opened a new Sipp to combine some or all of their existing pension pots.

As with other pensions, when you reach the age of 55, you can take up to 25% of the money in your Sipp as a tax-free lump sum (up to a maximum of £268,275).

With the rest of your money, you can keep it invested and make withdrawals as you need it (pension drawdown), secure a guaranteed income by buying an annuity or withdraw your savings as cash – either in one go or in chunks.

• Find out more: options for cashing in your pensions

Why it pays to compare Sipp charges

Charges can have a big impact on how much you end up with in your Sipp. 

Our calculations show that a Sipp with an initial value of £250,000 would be worth £13,400 more after 10 years if held with the cheapest investment platform (Freetrade) rather than the most expensive (Hargreaves Lansdown). 

If you add another five more years of charges and compound growth (we’ve assumed growth of 3% a year), the difference rises to £23,300.

Sipp providers typically charge either a fixed admin fee or a fee calculated as a percentage of the total amount you have invested. 

This percentage fee might apply to the whole pot or it might reduce above certain thresholds. For example, Barclays Smart Investor charges 0.25% on the first £200,000, then 0.05% on anything above that.

Companies with low fixed fees, notably Interactive Investor, Halifax Share Dealing and iWeb, are cheap for all pot sizes. 

Providers that cap or reduce charges above certain thresholds (such as Aegon, Barclays Smart Investor and Charles Stanley Direct) work out less expensive for pensions of more than £500,000.

• Find out more: our Which? Recommended Sipps for 2025  

Other charges to consider

Our pricing analysis assumes your money is invested entirely in funds. But it’s worth noting that some companies work out significantly cheaper if you’re investing in individual shares, investment trusts, exchange-traded funds (ETFs) and bonds. 

For example, AJ Bell, Aviva, Fidelity and Hargreaves Lansdown all have lower account charges if you hold shares. 

Hargreaves Lansdown caps fees at £200 a year, which means that £250,000 held in shares or ETFs will incur an annual account fee of only £200 compared with £1,125 if invested solely in funds.

Buying and selling investments within your Sipp will sometimes carry a per-transaction fee, depending on what you’re trading, so if you intend to trade frequently it’s worth choosing a provider with low or no transaction fees.

With funds, investment platforms will often allow you to trade fee-free or at a low cost (for example, AJ Bell charges £1.50 per transaction). You’ll usually pay between £6 and £12 per transaction for investment trusts, shares and ETFs. 

Don’t forget that the investments you choose to hold in your Sipp will come with their own fees that you’ll have to factor in on top of the platform fees. 

Passively managed funds (those that track a market index) can help to reduce costs, and fees average between 0.15% and 0.2% a year. If you opt for an actively managed fund, the cost is likely to be nearer 1%.

• Find out more: Sipp charges compared

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Should you opt for a Sipp?

More savers are deciding to take control of their retirement savings with a Sipp. The latest figures show there were 865,407 new sales of Sipps in 2023, up from 740,000 in 2020. 

In our survey, 43% of Sipp customers said they'd held their pension for less than three years.

Access to a wider range of investments, the convenience of consolidating different pension pots in one place and the possibility of lower charges are among the key selling points.

But this type of pension isn't suitable for everyone. They're best for savers who feel comfortable choosing and managing their own investments.

If you are less confident with investments but are still interested in a Sipp, you could consider paying a financial adviser to do the heavy lifting for you.

Alternatively, ready-made portfolios, offered by some investment platforms and pension startups, are a good option if you want personalised help with investment decisions, but don’t want to incur the expense of full financial advice.