How to invest like a Sipp millionaire

The number of self-invested personal pension (Sipp) millionaires has surged by 20% over the past two years, according to one investment platform. We look at how the millionaires invest, and top tips to growing your pension wealth

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The number of self-invested personal pension (Sipp) millionaires has soared by 20%, according to Hargreaves Lansdown.

The investment platform says it has 3,794 Sipp millionaires, up from 3,166 millionaires two years ago, as more customers boost their pension wealth.

There seems to be a lot more Sipp millionaires than ISA millionaires. A MoneyWeek article revealed in March that Hargreaves Lansdown had 836 ISA millionaires on its platform.

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Sipps are a type of personal pension - savers can add money to them and choose how to invest, such as in shares, funds and trusts, or use a ready-made fund. The government adds tax relief to the contributions, and savers can access the money from age 55.

“The number of people hitting the magic million in their Sipp continues to grow, with almost 3,800 HL clients currently Sipp millionaires,” comments Helen Morrissey, head of retirement analysis at Hargreaves Lansdown.

“It shows the dream of living retirement in comfort is possible, but it takes work – there is no 'get rich quick' formula here – the average age for our Sipp millionaires is 63.”

Meanwhile, the online investment platform AJ Bell says it has seen a 44% increase in its Sipp millionaires over the past year. This followed a 22% uplift in 2023. However, it declined to give the total number of Sipp millionaires.

Like Hargreaves Lansdown, it said the average age was 63. AJ Bell added that the gender split among Sipp millionaires was 90% men, 10% women.

The Hargreaves Lansdown data also showed that 90% of its Sipp millionaires are male, and that they tend to hold more investments in the UK, US and gilts than non-Sipp millionaires.

Investment platform Bestinvest told MoneyWeek that 91% of its Sipp millionaires are male and 9% are female. While it wouldn’t reveal the total number of Sipp millionaires, it said around 1% of its Sipp account-holders hold £1 million or more.

It added that the average age of its Sipp millionaires is 64.

We look at how the pension millionaires invest, tips to boost your pension savings, and whether the number of millionaires is predicted to climb further.

Why are there so many Sipp millionaires? 

The big difference between ISA millionaires and Sipp millionaires is that with a Sipp, you get free cash from the government in the form of tax relief. 

So Sipps are automatically turbo-boosted by tax relief (worth between 20% and 45% depending on your tax band), making it easier to build your wealth and hit a seven-figure sum.

Sipps are often used by the self-employed who don’t qualify for a workplace pension, or as a way to consolidate old pension pots. Some workers may also use a Sipp when transferring a final salary pension to a defined contribution scheme.

Hargreaves Lansdown runs a number of group Sipps, which companies use as workplace pensions, so those would be further boosted by employer contributions.

Most of its 3,794 Sipp millionaires have personal Sipps, rather than group Sipps, though.

Morrissey expects the number of pension savers hitting the £1 million milestone to continue to grow in future. 

“Auto-enrolment will see more people start saving for retirement earlier, making it more likely they will build up a good-sized pension throughout their career. The recent abolition of the lifetime allowance will also act as an incentive for people to continue to build on their pension savings and make full use of all their allowances,” she says.

Labour’s stance on reintroducing it, should it win the election, brought confusion and uncertainty to people’s planning. The recent news that it has opted not to go down this route has been greeted with a collective sigh of relief from savers and the pension industry alike.”

However, she highlights that “the real fly in the ointment of this data is the lack of female SIPP millionaires”. 

Only 10% are female. “This yawning gender pension gap is down to many factors – most notably lower average pay, part-time work and time spent out of the workforce looking after family members. Over time, these factors conspire to give women smaller pension pots than men.”

Tips to become a pension millionaire

Whether it’s a workplace pension or a personal pension like a Sipp, there are steps you can take to increase your nest egg - and your chances of becoming a pension millionaire.

First, start contributing to a pension as early as possible. “The earlier you start, the more time you have to build up a decent pension. Time in the markets means your contributions benefit from extra investment growth and you have more time to tweak your strategy to remain on track,” notes Morrissey.

Second, revisit your contribution level on a regular basis and increase your contributions if you can. Maybe you’ve had a pay rise - this is a good way of boosting your pension without too much financial pain.

If you have a workplace pension, aim to make the most of your employer contribution. Many employers stick to the auto-enrolment minimum (3% of qualifying earnings), but there are some who will pay in more if you contribute more. “This is known as an employer match and can be a good way of really boosting how much goes into your pension without too much extra having to come from you,” says Morrissey.

Look at how many pension pots you have in total. If you have quite a few, and/or you notice any have high charges on them, combining them into a simple low-cost pension can reduce your costs and make the admin easier. If you’re worried you may have lost a pension, follow our tips to tracing lost pensions, savings and investments.

And we have lots more tips on building a £1 million pension for a comfortable retirement.

What do Sipp millionaires invest in?

Sipp millionaires at Hargreaves Lansdown generally have a diversified mix of investments with assets spread across global, US and UK. They hold slightly higher allocations to the UK, US and gilts than non-millionaires.

Here are the top 10 most popular funds and shares for Sipp millionaires:

Swipe to scroll horizontally
Top 10 funds
Fundsmith Equity
Lindsell Train Global Equity
Legal & General International Index Trust
Legal & General US Index
Rathbone Global Opportunities
Artemis Income
Legal & General Global Technology Index Trust
BNY Mellon Global Income
Legal & General UK Index
Stewart Inv Asia Pacific Leaders Sustainability
Swipe to scroll horizontally
Top 10 shares
Row 0 - Cell 0
Lloyds Banking Group
Microsoft Corporation
Legal & General Group

Source: Hargreaves Lansdown 

Ruth Emery
Contributing editor

Ruth is an award-winning financial journalist with more than 15 years' experience of working on national newspapers, websites and specialist magazines.

She is passionate about helping people feel more confident about their finances. She was previously editor of Times Money Mentor, and prior to that was deputy Money editor at The Sunday Times. 

A multi-award winning journalist, Ruth started her career on a pensions magazine at the FT Group, and has also worked at Money Observer and Money Advice Service. 

Outside of work, she is a mum to two young children, while also serving as a magistrate and an NHS volunteer.