The best & cheapest SIPPs – low cost DIY pensions
In this independent SIPP comparison we compare SIPP charges from all the leading SIPP providers to help find the cheapest SIPP for you. A SIPP is short for a Self Invested Personal Pension. Finding a cheap low cost SIPP is only part of the story. In order to find the Best SIPP for your personal circumstances you must consider more than just cost.
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I suggest that you start by downloading the following excellent SIPP guide from the UK’s leading SIPP provider which tells you:
- How to start building a DIY pension pot in minutes by using a SIPP
- How to benefit from the new pension rules with a SIPP account
- How to improve your existing pensions and transfer them into a SIPP account
- How the pension tax rules work including tax relief on SIPP contributions
- The tax advantages of a SIPP and how they can boost your pension pot
What is a SIPP?
A SIPP is a DIY pension where investors can choose their own investments. The full title is Self Invested Personal Pension. Traditional personal pensions limit your investment choices to a small number of funds typically run by the pension provider’s fund managers. With a SIPP you can invest anywhere you want making your own choice of pension funds and managing them over time. That way you can ensure you are in the best pension funds and maximise your pension fund at retirement.
How do SIPPs work?
A SIPP works in a similar way as investing in a Stocks and Shares ISA via a fund platform, the only difference is that you get income tax relief on your SIPP contributions when investing in a SIPP. Using a SIPP to build a private pension fund gives the investor complete control over their investments to hopefully obtain a greater return than using the limited investment choices of a simple personal pension product, such as a stakeholder pension. The growth of fund supermarkets in recent years has meant the cost of investing in a SIPP has fallen dramatically, often comparable with that of a Stocks and Shares ISA. If you are considering investing in a Stocks and Shares ISA read our guide – The best stocks and shares investment ISA (& the cheapest fund platform).
Should I consider investing in a SIPP pension?
If you are currently in a company pension scheme, particularly one where your employer makes contributions then you will probably be better off remaining in that scheme. If, however, you are investing directly into a personal pension via a pension provider then you may want to consider moving to a Self Invested Personal Pension (SIPP) especially if you are comfortable with choosing your own SIPP funds and regularly monitoring them.
If you wish to learn how to choose which funds to buy and when, even if you are a complete novice, then read my FREE short series of emails which teaches you how. It takes just 2 minutes a day and is the result of thousands of hours of research and a career as an investment analyst. You will learn the simple tools and techniques that the very best fund managers use which you can too when DIY investing.
What should I look for when choosing a SIPP provider?
If you are simply looking for a cheap SIPP then there are a number of pension charges to consider when choosing your SIPP provider. These costs vary depending on what you invest in and how big your pension pot is. Yet the fees charged are only part of the story. Some providers will only allow you to invest in funds, others also offer access to shares and investment trusts. Some providers offer a basic service while others provide a more comprehensive service including a selection of useful tools and guides to help with your investment research.
The main SIPP charges and costs are:
- Admin fee – this is typically an annual charge. There might also be further charges applied for transferring money in or out of your SIPP (known as SIPP transfer charges)
- Dealing charges – this is a fee charged when dealing in funds or shares and they vary between SIPP providers. You need to make sure the provider you choose has a charging structure that meets your requirements
- Fund manager charges and other fees – fund managers also charge an annual fee. Some SIPP providers negotiate cheaper fund deals and pass this reduction on to their investors. Also check out the fund platform’s full fee list for any extra fees charged before you make your final choice
Below, we include a full SIPP comparison of the costs of each SIPP provider so that you can find the cheapest SIPP for the size of your pension pot.
However, as previously mentioned, you shouldn’t just focus on cost but instead consider value for money as well as the level of service provided. If good customer service (including helplines) as well as research and tools are important to you then you need to look beyond cost. A lot of DIY investors require the ability to buy and sell investments quickly and easily online or via an app – so make sure your SIPP provider will let you. Also not all SIPP providers allow you to invest in shares and investment trusts, something the more experienced DIY investor might want to do. So if this is important to you then check your permitted investment choices.
Which is the best SIPP?
The Best SIPP for tools & functionality – Hargreaves Lansdown Vantage SIPP
Hargreaves Lansdown Vantage SIPP – click for more details
- reasonably priced and offers excellent investment choice and customer service
- the most popular SIPP in the UK and winner of numerous Best SIPP awards
- excellent website and app enabling you to buy and sell investments quickly and easily
- allows you to invest in shares, unit trusts and investment trusts
- annual admin charge for funds – 0.45% up to £250,000, 0.25% for £250,000 to £1m, then 0.10% above £1m
- separate 0.45% charge for holding shares, applied to the whole account, but capped at £200
- transfer out fee £25 per holding
Which is the cheapest SIPP?
If you are just interested in low cost SIPPs then use our SIPP charges comparison calculator to compare 21 different SIPP providers and find the cheapest SIPP for your portfolio size. The calculator will take into account the size of your portfolio as well as the types of investments you might want to hold to find the cheapest SIPP.
The cheapest SIPP for most people – Fidelity SIPP
Fidelity SIPP – click for more details
- a low cost SIPP
- no set up or annual fees
- just the annual fund admin fee is applied at £25 p.a. flat fee up to £7500 then 0.35% up to £250K, then 0.2% on larger portfolios but capped at £2000, fee paid monthly in arrears
- there is a trading fee of £9
- Online service not as slick as the likes of Hargreaves Vantage SIPP.
A J Bell Youinvest – click for more details
- annual charge for funds at 0.25% up to £250,000, 0.10% for £250,000 up to £1m, 0.05% for £1m – £2m, no charge over £2m investment
- fund dealing is a flat fee of £1.50 online
- share dealing is £9.95 per deal for zero to nine deals, and £4.95 a month for 10 or more
- £25 per holding for one-off income payment, £100 p.a. for regular payments
Alliance Trust and Savings
- monthly admin charge of £15 + vat
- buying or selling investment online £12.50 per deal
- transfer out fee £150 plus vat
- annual charge for funds and shares of 0.30% up to £250,000 and 0.20% from £250,001 to £1m, no charge over £1m
- fund dealing is free while share deals will cost you £7.50 per deal
- transfer out fee is £100 for investment below £100k and NIL for £100k investment or above,
- annual admin fee of £100 + vat, waived if assets are £30,000 or more
- annual charge for funds and shares at 0.25%
- fund dealing is free, share trades £10 per trade
- transfer out fee £125 + vat
- annual admin fee of £80 + vat
- annual charge for funds £80 per year to use on trades
- fund dealing and share dealing charge of £10 per trade
- transfer out fee free in 1st year then £100 after
- annual admin fee £99 + vat
- fund dealing free, share dealing £12.50 or £6 if more than 100 deals per quarter
- transfer out fee £15 per holding
The Share Centre
- annual admin fee £12 + vat per month.
- standard dealing fee of 1% with a minimum of £7.50, more frequent traders £7.50 a trade
- Transferring in is free, transfer out £100 + vat
The cheapest SIPP provider comparison table
If you are only focused on getting the cheapest SIPP then below is a comparison of SIPP charges for all the major SIPP providers. Simply look at the column that most closely matches the size of your pension pot for an estimate of the annual cost if your SIPP were held with each fund platform.
|Portfolio size||Fund Switching Costs||£5,000||£15,000||£25,000||£50,000||£100,000||£250,000||£500,000||£1,000,000|
|A J Bell Youinvest||£49.50||£80||£140||£200||£250||£350||£350||£350||£350|
|Alliance Trust Savings||£125.00||£311||£311||£311||£311||£311||£311||£311||£311|
|Charles Stanley Direct||£0.00||£133||£158||£183||£245||£370||£745||£1,370||£2,120|
|Chelsea Financial Services||£0.00||£30||£90||£150||£300||£600||£1,500||£2,875||£5,375|
|Close Brothers A.M. Self Directed Service||£0.00||£18||£53||£88||£175||£350||£875||£1,750||£3,500|
|Close Brothers A.M. Self Directed Service1||£0.00||£14||£43||£71||£142||£283||£708||£1,417||£2,833|
|Halifax Share Dealing||£125.00||£215||£215||£215||£215||£305||£305||£305||£305|
|iWeb year 12||£50.00||£340||£340||£340||£340||£430||£430||£430||£430|
|James Hay Modular iPlan||£0.00||£204||£222||£240||£285||£375||£450||£900||£1,650|
|The Share Centre||£12.50 to £753||£185||£210||£235||£344||£344||£344||£344||£344|
The data was compiled by langcatfinancial in May 2015
1. Special offer of platform charge of 0.25% for rest of 2015, reverting to 0.35%. 2. Account opening fee of £200 applies here 3. Assume frequent trader option for £50k and above. Assume standard option and 25% portfolio turnover for below.