If you want to have increased control of your retirement and take your pension out of the hands of pension providers, then you should consider building a DIY pension with a SIPP. They’re perfect if you’re not happy with your current pension plan as you can manage your own pension pot, decide where to stash it and where to invest it.

Here’s a brief guide about SIPPs and why they could be a good pension investment option for you.

What is a SIPP?

A SIPP, or a self-invested personal pension, is a DIY pension that allows you to invest almost anywhere you like and choose your own investments. It’s a good option for someone who has knowledge of investing and is willing to spend time doing research.

There are two types of SIPPs:


  • Low-cost SIPPs


You’re in control of all the decision-making, which is why the SIPP can be kept low-cost.


  • Full SIPP


This SIPP offers the widest choice of investments. However, they will also typically also have higher charges.

A DIY pension plan requires someone who feels comfortable managing their own investment portfolios and picking their own investments – although some SIPPS also offer ready-made portfolios where experts manage your investments for you.

How Much Will It Cost?

The cost of a SIPP varies depending on the supplier. Some are more expensive than others, so think long and hard about what kind of investor you’re going to be. Consider what investments you’ll hold, how much they’ll be worth and how regularly you’ll change them. Then, you can work out which provider will be cheapest. You can find out more by contacting investment services such as Bestinvest, who can give you guidance on the best options for you.

When choosing a supplier, keep an eye on the following charges: set up fee, annual management fee, dealing charges, exit/transfer fees and income drawdown charges. Together, these can add up to significant amounts of money so make sure you take time to find the best deal for you.

How to Use a SIPP

When starting a SIPP, you can either move the money from an existing pension scheme or start it with money that hasn’t been held in a pension – you could either make monthly contributions or invest a lump sum.

Depending on if you’re an earner or non-earner, there are limits to the amount you can put in a SIPP and still get tax relief. Take a look at the advice provided by Money Saving Expert for up-to-date data on contributions.
If you’re willing to put in the research about where to invest your pension, you could find a DIY pension that suits you. If you’re looking for something that’s low cost and where you have the overall control, then a SIPP may be for you.