How to pick a Sipp

Self-invested personal pensions (Sipps) let you manage your pension plan, but charges vary greatly between providers. We explain how you can keep your costs low.

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Picking a self-invested personal pension, or SIPP can be challenging. There are so many products out there, where do you start?

Picking the accounts with the lowest fees is a good place to begin, but providers often charge different fees for different services and the most cost-effective provider will largely depend on the size of your pension fund.

We explain the fees you need to keep an eye out for and platforms to consider.

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Comparing SIPP charges

Broadly speaking, Sipp charges during the accumulation phase (when you're building up the fund) fall into three categories. You need to consider the administration charge that the provider charges for the plan itself; dealing fees incurred when you buy and sell various investments; and the charges on the underlying funds in your Sipp. Some providers have negotiated cheaper fees on underlying funds, although they don't always pass these on in full.


On smaller pension funds, percentage-based charges, rather than fixed cash fees, typically work out more cheaply.

Research published by personal finance site Money to the Masses singles out AJ Bell Youinvest and Vanguard as offering particularly good value.

AJ Bell has an annual charge for funds at 0.25% up to £250,000. Vanguard has an annual charge of just 0.15% a year, capped at £375 for SIPP accounts.

Providers such as Interactive Investor, iWeb and Halifax Share Dealing look more competitivemorecompetitive for larger sums.

Add in the effect of drawdown charges, and the picture changes again. You'll still be paying for the Sipp, but many providers levy additional fees on investors as they move into the decumulation phase of their retirement planning (withdrawing money).

Research conducted by Which? shows AJ Bell, Legal & General and Vanguard offer the best value overall. None of the three charge an annual SIPP fee nor an annual drawdown fee. Vanguard’s core charges total 0.15% while AJ Bell’s core charges are 0.25% up to £500,000 and 0.18% beyond. Legal & General’s core charges are 0.25%.

David Prosser
Business Columnist

David Prosser is a regular MoneyWeek columnist, writing on small business and entrepreneurship, as well as pensions and other forms of tax-efficient savings and investments. David has been a financial journalist for almost 30 years, specialising initially in personal finance, and then in broader business coverage. He has worked for national newspaper groups including The Financial Times, The Guardian and Observer, Express Newspapers and, most recently, The Independent, where he served for more than three years as business editor.