Frequently Asked Questions About SIPPs (Self-Invested Personal Pensions)

A Self-Invested Personal Pension (SIPP) is one of the most powerful ways to save for retirement in the UK. Because you choose your own investments, it offers more freedom than a standard workplace pension.

Here are the answers to the most common questions about SIPPs in 2026.

1. What is a SIPP?

A SIPP is a “DIY” pension. Instead of your pension provider picking a “default” fund for you, a SIPP gives you the steering wheel. You can invest in almost anything—from global stocks and ETFs to commercial property.

2. Who can open a SIPP?

Almost any UK resident under age 75 can open one. This includes:

• Employees (even if you have a workplace pension).
• Self-employed individuals.
• Non-earners (including stay-at-home parents).
• Children (via a Junior SIPP opened by a parent).

3. How much can I contribute to a SIPP?

For the 2026/27 tax year, the Annual Allowance is £60,000.

• You can contribute up to 100% of your earnings or £60,000 (whichever is lower).
• If you don’t earn an income: You can still put in £2,880, which becomes £3,600 after tax relief.

4. What are the tax benefits of a SIPP?

• Instant 20% Top-up: If you put in £80, the government adds £20 automatically.
• Extra Relief for High Earners: 40% and 45% taxpayers can claim even more back via their tax return.
• Tax-Free Growth: You pay zero Capital Gains Tax (CGT) or Dividend Tax on your investments.

5. What can I invest in?

SIPPs offer a massive “investment menu,” including:

• Stocks & Shares (UK and International).
• Investment Trusts and Funds.
• ETFs (Exchange Traded Funds).
• Bonds and Gilts.
• Commercial Property (like an office or shop).

6. When can I take money out?

Currently, you can access your SIPP at age 55. However, this is rising to age 57 on 6 April 2028. Unlike an ISA, your money is locked away until you reach this age.

7. What happens when I retire?

You have three main options:

1. Tax-Free Cash: You can usually take 25% of your pot as a tax-free lump sum.
2. Drawdown: Keep the rest invested and take an income whenever you need it.
3. Annuity: Use the money to buy a guaranteed income for life.

8. What is pension drawdown?

Drawdown is a flexible way to take your pension. You keep your money invested in the market and “draw down” an income from it. You can stop, start, or change how much you take at any time.

9. Can I transfer my old pensions into a SIPP?

Yes! Many people use a SIPP to consolidate several old workplace pensions into one place. This makes it easier to track your performance and often reduces the total fees you pay.

10. What fees do SIPP providers charge?

• Platform Fee: A fee for using the service (can be a % or a flat monthly cost).
• Trading Fee: A cost every time you buy or sell a stock.
• Fund Fee: Charged by the manager of the funds you choose (e.g., Vanguard or BlackRock).

11. Can I buy property with a SIPP?

You can buy commercial property (like a warehouse or an office), but you cannot buy residential property (like a buy-to-let house) in a SIPP.

12. What happens to my SIPP when I die?

Important Change (April 2027): * From April 2027, unused pension funds will be included in your estate for Inheritance Tax (IHT) purposes.

• If your total estate is over the £325,000 threshold, your SIPP could face a 40% tax bill.
• If you die after age 75, your beneficiaries may also pay Income Tax on any money they withdraw.

13. Can I have more than one SIPP?

Yes, you can have as many as you like. However, it’s usually cheaper and easier to manage just one or two.

14. How do I choose the best SIPP provider?

Look for a balance of low fees and good tools.

• Small pots: Usually better with percentage-fee providers (like AJ Bell or Vanguard).
• Large pots: Usually better with flat-fee providers (like Interactive Investor).

15. Can my employer pay into my SIPP?

Yes, but they aren’t required to. Most people use a Workplace Pension for employer contributions because of the mandatory “match,” then use a SIPP for their own extra savings.

16. SIPP vs. Workplace Pension: What’s the difference?

• Workplace Pension: Your employer picks the provider; they must contribute if you do.
• SIPP: You pick the provider; you have thousands more investment choices.

17. Is there a limit on how big my SIPP can grow?

The Lifetime Allowance was abolished, so there is no limit on the total size. However, the maximum Tax-Free Lump Sum you can take is capped at £268,275.

18. Can I buy US stocks (like Tesla or Apple) in a SIPP?

Yes, most modern SIPPs allow you to trade on international exchanges. Just watch out for FX (Foreign Exchange) fees, which can be up to 1%.

19. How do I get my extra 20% or 25% tax relief?

If you are a higher or additional rate taxpayer, the first 20% is added to your SIPP automatically. You must claim the rest via your Self-Assessment tax return or by contacting HMRC to change your tax code.

20. Is a SIPP right for me?

A SIPP is perfect if you want control and are happy to make your own investment decisions. If you prefer a “hands-off” approach, a standard workplace pension or a robo-advisor might be simpler.

SIPPs offer flexibility, tax benefits, and investment control, making them a powerful retirement savings tool. Whether you’re starting a SIPP, transferring pensions, or planning withdrawals, understanding the rules and options can help you maximize your retirement savings.