What is the difference between a SIPP and a workplace pension?

A workplace pension is set up by your employer with limited investment choices. A SIPP is a personal pension you control, with access to thousands of investments. You can have both — and should always claim your employer match first.

How much tax relief do I get on SIPP contributions?

Basic-rate taxpayers get 20% relief automatically. Higher-rate (40%) and additional-rate (45%) taxpayers claim extra relief through self-assessment. A £10,000 gross contribution costs a higher-rate taxpayer £6,000 after all relief.

Can I transfer my old workplace pension to a SIPP?

Yes. Most defined contribution workplace pensions can be transferred to a SIPP. This consolidates your pensions and may reduce fees. However, always check for exit penalties and whether you lose any guaranteed benefits.

What can I invest in through a SIPP?

Most SIPPs offer funds, ETFs, investment trusts, individual shares, bonds, gilts, and cash. Some also allow commercial property. The range depends on the provider.

How do I withdraw from my SIPP?

From age 55 (57 from 2028), you can take 25% tax-free as a lump sum. The remainder can be drawn through flexible drawdown (taxed as income) or used to buy an annuity (guaranteed income for life).

What happens to my SIPP when I die?

If you die before 75, your SIPP can be passed to beneficiaries tax-free. After 75, beneficiaries pay income tax on withdrawals. SIPPs are normally outside your estate for inheritance tax purposes.

SIPP Pension Explained: Take Control of Retirement

What Is a SIPP?

A Self-Invested Personal Pension (SIPP) is a type of personal pension that gives you full control over how your retirement savings are invested. Unlike workplace pensions with limited fund choices, SIPPs offer access to thousands of investments including funds, ETFs, shares, bonds, and investment trusts.

Tax Relief: The Key Benefit

SIPP contributions receive tax relief at your marginal rate:

Basic rate (20%): Contribute £8,000, the provider claims £2,000 tax relief = £10,000 invested
Higher rate (40%): Same £8,000 contribution, plus claim £2,000 via self-assessment = effective cost £6,000
Additional rate (45%): Effective cost of just £5,500 for £10,000 invested

The annual allowance is £60,000 (or 100% of earnings if lower). Unused allowance can be carried forward from the previous three tax years.

Investment Options

SIPPs offer far broader investment choices than workplace pensions:

Index funds and ETFs — Low-cost passive tracking of global indices
Active funds — Professionally managed portfolios aiming to outperform
Individual shares — Direct ownership of UK and international companies
Investment trusts — Listed funds with potential for income and growth
Bonds and gilts — Lower-risk fixed income for capital preservation

AI trading bot analysing market data with neural network patterns — AI-powered tools are increasingly used to identify market patterns and automate trades.

Choosing a SIPP Provider

Key factors to compare:

Platform fee: Percentage-based (e.g., Vanguard 0.15%) or flat fee (e.g., interactive investor £12.99/month)
Fund range: Number and variety of available investments
Drawdown options: Flexibility for taking retirement income
Customer service: Quality of support for complex pension decisions

Accessing Your SIPP

From age 55 (rising to 57 in April 2028), you can access your SIPP in several ways:

Tax-free lump sum: Take up to 25% of your pension pot tax-free
Flexi-access drawdown: Withdraw flexibly, paying income tax on amounts beyond the 25% tax-free portion
Annuity purchase: Buy a guaranteed income for life from an insurance company
Combination: Many retirees use a mix of all three approaches