Should you pick an Isa or a Sipp?

If you’re planning to retire in the next few years, a pension may now be a better bet than an Isa. Here, we list five of the best Sipps available now.

The choice between saving into an Isa or a personal pension used to be a trade-off between flexibility and tax breaks. Isas give you maximum flexibility: you can take your money out when you want (subject to any restrictions imposedby your provider).

Pensions give you generous up-front tax relief on your contributions but your money is completely locked away until you reach the age of 55. Thereafter, most people are subject to limits on how much they can take each year.

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Cavendish Online0.25% of portfolio value per year for funds. Stocks not availableThe percentage-based fund custody fee and no Sipp administration fee means that Cavendish is probably the cheapest option for a funds-only Sipp.
iWeb Share Dealing£22.50 per quarter under £50,000, £45 per quarter above. £5 per tradeA relatively low administration fee, no funds custody charges and low trading fees makes iWeb very good value for both funds and shares.
AJ Bell Youinvest£5 per quarter under £10,000, £15 per quarter £10,000 to £20,000, £25 per quarter above £20,000. Fund charge (OEICs and unit trusts): 0.20% per annum (max £200 per year). £4.95 per trade for funds. £9.95 per trade for stocksThe tiered Sipp administration fee makes Youinvest one of the cheapest choices for stock-based Sipps of all sizes. Good value for international stocks, although very active traders may do better with a provider that allows you to hold foreign currency. The range of funds is wide and fund charges are reasonable.
iDealing + EPML£5 per quarter account fee plus £200+VAT per year Sipp administration fee. £9.90 per tradeiDealing allows the use of several different Sipp administrators, of which EPML is probably the cheapest. It's particularly useful for those who want the ability to trade a wide range of assets including derivatives in their Sipp (other alternatives for this include Interactive Brokers and Saxo Capital Markets).
X-O£95+VAT per year. £5.95 per tradeX-O's Sipp has a fairly low annual fee and makes no other charges for withdrawals at retirement. That could make it attractive for those expecting to retire soon. Only UK stocks, investment trusts and ETFs are available.
Cris Sholto Heaton

Cris Sholto Heaton is an investment analyst and writer who has been contributing to MoneyWeek since 2006 and was managing editor of the magazine between 2016 and 2018. He is especially interested in international investing, believing many investors still focus too much on their home markets and that it pays to take advantage of all the opportunities the world offers. He often writes about Asian equities, international income and global asset allocation.

Cris began his career in financial services consultancy at PwC and Lane Clark & Peacock, before an abrupt change of direction into oil, gas and energy at Petroleum Economist and Platts and subsequently into investment research and writing. In addition to his articles for MoneyWeek, he also works with a number of asset managers, consultancies and financial information providers.

He holds the Chartered Financial Analyst designation and the Investment Management Certificate, as well as degrees in finance and mathematics. He has also studied acting, film-making and photography, and strongly suspects that an awareness of what makes a compelling story is just as important for understanding markets as any amount of qualifications.