A Standard Pension invests your savings for you to help them grow

A Sipp (Self Invested Personal Pension) is the DIY version, it gives YOU control of where your money is invested

If you’re willing to do some of the work a Sipp can have much lower charges

But there is RISK attached to investment and you may get back less than you put in


Need to know

  • A Sipp can be cheaper than a standard Personal Pension, some have 0% set up and annual management fees because you aren’t paying for financial advice, you are making the choices on where to invest yourself. Those with higher charges are likely to include financial advice
  • Whilst there isn’t official advice on low cost Sipps, there is guidance and some providers will have pre-made portfolios to help you get started
  • Other people such as your employer (or your mum) can pay into your Sipp, you just need to arrange it with your provider
  • Your employer does not HAVE to contribute, so if a workplace pension is available you may find this is a better option
  • Like other pensions your Sipp savings and growth will be TAX FREE, up to the annual allowance of £40,000 a year (from April 2014) and the lifetime allowance of £1.25 million (from April 2014)
  • Most Sipp providers allow you to start and then manage your fund online
  • If your pension provider is FCA regulated any money paid in but yet not invested is 100% safe. However once you invest you risk getting less back than you put in
  • You will probably find your Sipp has a minimum monthly payment or minimum amount you can put in as a lump sum, for a Fidelity Sipp you can pay £80 a month or £800 in lump sums
  • You will also automatically receive the State Pension if you have been contributing to National insurance for 30 years, see the box below

Pick the best Sipp

When picking a low cost Sipp try and find one with low/no set up fees, which can be as much as £500, or annual management fees.

Market leading Sipps include:

Fidelity: 0% set up fee, 0.4% annual fee, online set up

Hargreaves and Landsdowne Vantage Sipp: 0% set up fee, 0.5% annual fee, online set up

Alliance Trust Select Sipp: 0% set up fee, £275 annual fee but rebates ALL commission payments

A J Bell Youinvest SIPP: 0% set up fee, 0% annual fee, online set up

The Money Advice Service has comparison table which is a good starting point. But with something as important as a pension you may find getting independent financial advice from an IFA is your best option

Compare Pensions

Why we like it:

  • very useful comparison table that compares pensions
  • compares charges, investment options and how you buy
  • good starting point

Watch out:

  • cannot tell you which pension is best for you

Find an IFA

Why we like it:

  • lists FCA regulated Financial Advisors
  • Advisors are given star ratings by past customers
  • can search by area
  • can send a message to multiple IFAs at the same time
  • first meeting is often free

Watch out:

  • IFAs can charge £75-£250 an hour
  • how much they charge is not listed, you have to request the info

State Pension

The State Pension is available to everyone who has paid National Insurance for 30 years or more, or has been claiming benefits for unemployment or sickness

You can top this up with voluntary payments to ensure you qualify

It is currently £115.95 per week but rises every year by at least 2.5%

Women currently need to be 62 to claim, men 65, the ages will steadily rise, those born after 6th April 1978 will need to be 68 before they can claim

You can work out how much you are currently entitled to, and how many years you have left until you can claim using the State Pension calculator


The inside track

  • If you die before you are able to take your pension the money is not lost. It will go to the beneficiaries named when you took the pension out


  • Corporate bonds: When your money is lent to a company, rather than a bank, in order to earn you interest.
  • Equities/ Shares: A small part of a company you can buy so you are entitled to some of the company’s profits. Your return can go up or down.
  • Ethical investment: Investing in companies that are good for your karma (eg. not weapons)
  • Exit charge: A fee you may be charged when you cash in your shares or bonds. 
  • Fixed interest securities: When your money is lent to a government or company, interest is paid and then it is all paid back at an agreed time
  • Dividends: A payment made by a company to its shareholders/ investors

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