The Short Answer
A Self-Invested Personal Pension (SIPP) is a pension that gives you full control over how your money is invested. Unlike a workplace pension where your employer chooses the provider and fund range, a SIPP lets you pick from thousands of funds, shares, bonds, and other investments.
SIPP vs Workplace Pension
Workplace Pension
- Employer contributes alongside you
- Limited fund choice
- Low fees (usually)
- Simple — set and forget
SIPP
- You choose your investments
- Wider fund range
- Potentially higher fees
- More control and flexibility
You can have both — many people use a workplace pension for the employer match and a SIPP for additional contributions.
Tax Relief
SIPPs get the same tax relief as any pension:
- Basic rate: the government adds 25% — you pay £80, your SIPP receives £100.
- Higher rate: claim an extra 20% via self-assessment.
- Additional rate: claim an extra 25% via self-assessment.
The £60,000 annual allowance applies across all your pensions combined.
Who Is It For?
- People who want control over their investments.
- Those consolidating multiple old workplace pensions.
- Higher earners who have maxed their workplace pension match.
- Self-employed people with no employer pension available.
Costs to Watch
- Platform fee: 0.15–0.45% per year.
- Fund fees: 0.05–1.5% depending on fund type.
- Trading costs: if buying individual shares.
These add up — a 0.5% difference in fees can cost tens of thousands of pounds over 30 years.