Self-Invested Personal Pension (SIPP)

A Self-Invested Personal Pension, or SIPP for short, is your own personal pension. It’s not managed by your workplace or the pension provider, so you can choose:

• • who you take your SIPP with
  • how much money you invest and when (subject to the maximum government annual allowance of £60,000 across all your pensions per tax year before triggering a tax charge)
  • how you invest your money
  • the fees and charges you’re prepared to pay  
  • when and how you withdraw your savings (from age 55, rising to age 57 from 6 April 2028).

You might open a SIPP if you’re self-employed, or in addition to your workplace pension if you want to make the most of your pension annual allowance. The allowance gives 20% pension tax relief from the government (see "What are the tax rules for a SIPP?"). So for every £8 you pay in, the government will pay in £2. Higher rate taxpayers can claim back more tax relief through self assessment. Please remember that pension and tax rules are subject to change, and the benefits of a SIPP will depend on your own circumstances.

You can also open a SIPP to combine older pensions in one place. This can help you manage your retirement savings, which makes it easier to plan and involves less admin. It could also save you money in fees. You wouldn’t transfer a workplace pension to a SIPP if you’re still working there and contributing to it. And you’re unlikely to invest in a SIPP instead of a workplace pension because you would miss out on any employer contributions.

Important! Before you transfer a pension you should always check if an exit fee applies and whether you would lose valuable benefits. See "What are safeguarded benefits" for more information. When you start flexibly accessing your pension savings, your annual allowance reduces to £10,000. This is called the Money Purchase Annual Allowance (MPAA).  For more about this see “How much can I invest in a SIPP?”

To open an SIPP with us, you need to be:

• under 75 years old
• a resident in the UK for tax purposes
• at least 18 years old.

If you live and work overseas, you can't open this SIPP unless you're a Crown Servant (someone working for the Government abroad) or the spouse or civil partner of a Crown Servant. If you're classed as a US person for tax reasons (requiring you to include your global income on your US tax return) you're not eligible either.

You should feel comfortable investing for the long term, which usually means at least five to 10 years. 

A SIPP can only be held by one person, so you can't open a joint account.

Other providers may have different criteria.

You’ll receive 20% tax relief on any contributions you make to your pension. For every £8 you pay in, the UK government will pay in £2. If you’re a higher rate tax payer then you can claim more back through self-assessment. You only receive this tax relief on new contributions. If you transfer one pension to another, you won't receive tax relief again.

You pay no capital gains tax on the growth of your investment.

You can start to withdraw your pension savings from age 55 (rising to age 57 from 6 April 2028). When you do, the first 25% of the total value of your pension savings is tax free up to the Lump Sum Allowance of £268,275. After that you’ll pay income tax on withdrawals according to your marginal rate.

Annual allowance

The government gives most people tax relief on up to £60,000 of pension savings each tax year (including employer contributions). To get tax relief, you must be under the age of 75 and a UK resident.

You can’t contribute more than you earn (unless you earn less than £3,600, in which case you can contribute it all). You can pay into a pension if you have no earnings and pay no tax – up to a maximum of £2,880 a year, plus £720 from His Majesty's Revenue and Customs (HMRC).

You can’t withdraw your pension savings until you’re age 55 (this rises to 57 from 6 April 2028), so you might want to think about having some of your savings in a place where you can access them if you need to.

Tapered Annual Allowance

If you earn more than £260,000 a year (including employer pension contributions), then this annual allowance is reduced by £1 for every £2 over £260,000 you earn – until it reaches £10,000. This is called the Tapered Annual Allowance.

Money Purchase Annual Allowance

When you start flexibly accessing your pension savings, your annual allowance reduces to £10,000. This is called the Money Purchase Annual Allowance (MPAA). Please note - while purchasing an annuity is accessing your pension savings, it doesn’t trigger the MPAA. Also - if you move your SIPP savings into Income Drawdown, you can take a tax-free lump sum without triggering the MPAA, as long as you've not taken a taxable withdrawal. 

You should be aware that the money you put in will be at risk and you might get back less than you invested. You should only invest if you have sufficient emergency funds set aside to cover necessary expenses.

With a SIPP your money is placed in funds that have the opportunity to increase in value more than a regular savings account. But that means the value of your savings could also go down and you might not get back the amount you invested. So when you choose how to invest your money, it’s important to understand what you’re investing in, and how these potential risks are managed. If you want to find out more about our investments, visit investment options .  

Here is more information specifically on investment risk.