SIPP (Self-Invested Personal Pension)

A Self-Invested Personal Pension, or SIPP, is a type of personal pension designed for people who want greater control over how their retirement savings are invested. Unlike a standard personal pension, which will often offer a more limited range of funds selected by the provider, a SIPP typically gives access to a wider range of investment options and more flexibility in how the pension is managed.

At Lewis Christopher we advise clients across Milton Keynes, Buckinghamshire and further afield on whether a SIPP suits their circumstances, on bringing existing pensions together, and on how a SIPP fits into a wider retirement and investment plan.

The main difference is choice. A standard personal pension usually offers a managed range of funds chosen by the provider, which suits many people perfectly well. A SIPP widens that range considerably, and with it the amount of decision-making involved.

This can make a SIPP suitable for clients who want a more tailored investment approach, are consolidating existing pensions, or want their pension to form part of a broader wealth management strategy. While that extra flexibility can be valuable, it is also important to make sure the investment choices, charges and level of ongoing management remain appropriate for your objectives and attitude to risk.

A wider choice is not automatically a better outcome. If you would not use the extra options, a simpler and often cheaper personal pension may serve you better.

Many people reach their fifties with pensions scattered across several former employers, often without a clear picture of what they hold or what it costs. Bringing them together into a single SIPP can make the total easier to see, simpler to manage and easier to align with one investment strategy.

Consolidation is not always the right move. Older pensions can carry valuable features that would be lost on transfer, such as guaranteed annuity rates, protected tax-free cash or enhanced death benefits. Exit penalties may apply.

We do not advise on transfers from defined benefit or final salary schemes. This is a specialist area requiring advice from a defined benefit pension transfer specialist, and we're happy to point you in the right direction if this applies to you.

We review what you already hold, identify anything worth keeping exactly where it is, and only recommend consolidation where it genuinely improves your position.

Contributions to a SIPP attract tax relief in the same way as any other personal pension. Basic rate relief is added automatically by the provider, and higher or additional rate taxpayers claim the remainder through self assessment.

For the 2026/27 tax year the annual allowance is £60,000, covering contributions from you and any employer. You can normally only receive tax relief on contributions up to 100% of your relevant UK earnings, and those with little or no earnings can contribute up to £3,600 gross a year. Unused allowance from the previous three tax years can often be carried forward.

Higher earners may have a reduced allowance. The annual allowance tapers by £1 for every £2 of adjusted income above £260,000, down to a minimum of £10,000, and applies where threshold income also exceeds £200,000. Anyone who has already taken taxable income flexibly from a pension may instead be subject to the Money Purchase Annual Allowance of £10,000, which also removes the ability to carry forward.

One of the clearest reasons to choose a SIPP over a standard personal pension is the ability to hold commercial property. Business owners sometimes use a SIPP to buy their own trading premises, with the business then paying rent to the pension rather than to a third party landlord.

It is a long-term commitment rather than a quick decision. Property is illiquid, valuations and management carry costs, and holding a single large asset inside a pension concentrates risk in one place. It suits some business owners very well and others not at all, which is why it is worth talking through properly before committing.

Without an employer scheme or auto enrolment behind you, pension saving is entirely your own responsibility, and it is easily deferred when income is uneven. A SIPP allows contributions to be varied or paused as trading allows, and carry forward can be useful in a strong year following leaner ones.

The flexibility only helps if the contributions actually get made. We work with self-employed clients to set a realistic level and review it as the business changes.

A SIPP typically costs more to run than a straightforward personal pension, reflecting the wider investment choice. Charges may include a platform or administration fee, dealing costs, underlying fund charges and any adviser fee. Some providers charge a flat annual sum, others a percentage of the pot.

Charges compound over decades, so the difference matters. We look at total cost against what the arrangement actually delivers, rather than at headline percentages alone.

From age 55, rising to 57 in April 2028, you can normally begin taking benefits. Most SIPPs offer flexi-access drawdown, where the pension stays invested and you draw income as required, usually alongside a tax-free lump sum.

Drawdown keeps your money invested and therefore exposed to market movements, and there is no guarantee it will last as long as you need it to. Sustainable withdrawal rates, investment strategy and the tax treatment of what you take all need reviewing together, and revisiting as circumstances change.

From 6 April 2027, most unused pension funds and death benefits will form part of your estate for inheritance tax purposes. This is a significant change to how pensions have traditionally been treated, and it affects how a SIPP fits into wider estate and retirement planning, particularly around how much to draw down during your lifetime versus leave invested. If leaving a pension to your family is part of your plan, this is worth reviewing sooner rather than later.

A pension rarely sits on its own. Depending on your circumstances, a SIPP usually joins up with one or more of these: