How Much Do SIPPs Cost? (Fees and Charges)
SIPPs typically cost from 0.1% to 0.45% of your pension value per year, or a flat monthly fee.
That’s your provider’s charge. But you might also pay charges on your underlying investments if you invest in managed funds, investment trusts or a ready-made portfolio.
And there’s also potential dealing costs, ad hoc administration fees, and potential withdrawal or transfer out charges when it comes to overall SIPP costs.
We break down each of these and how they work in this guide, and give you tips on how to save money on SIPP fees by shopping around based on your specific investment portfolio.
How Do SIPP Fees Work?
Ongoing SIPP Provider Fees
Ongoing provider fees are like a subscription fee for keeping your SIPP account active.
These fees can be a fixed amount, but they’re more commonly a percentage of your total investment portfolio.
Most SIPP providers charge 0.25-0.45% per year against your portfolio.
However, some providers have a tiered fee structure to reduce the impact of charges on larger pension portfolios. For example, a SIPP provider might have a charging structure that looks like this:
| Pension Pot Size | Annual Management Fee (%) |
| Up to £50,000 | 0.45% |
| £50,001 – £100,000 | 0.35% |
| £100,001 – £250,000 | 0.25% |
| £250,001 – £500,000 | 0.20% |
| £500,001 – £1,000,000 | 0.15% |
| Over £1,000,000 | Free |
This kind of fee structure is more attractive to high-value SIPP owners. They still pay the higher rates at the lower thresholds like everyone else, but their total cost is lower thanks to the lower charges in each of the higher tiers.
Your provider’s ongoing charges usually cover basic administration tasks, like tracking your money and handling transactions.
SIPP Provider Fees Calculator
If you know roughly what assets your SIPP portfolio is going to consist of, you can enter the values into our calculator below to get a rough estimate of the annual fees each SIPP provider would charge you based on their fee structures.
It’s split between funds and equities because some providers charge different amounts for each asset class (this is worked into the calculator).
As we mentioned earlier, the ongoing fees for your SIPP are only one type of SIPP charge so are not the only factor to consider. Also, you should think about other SIPP features and benefits including customer service, platform usability, the research they provide etc. More on those aspects later.
Underlying Investment Fees (for EOICs, Unit Trusts, Investment Trusts, etc.)
On top of SIPP provider fees, you’ll also pay fees for the underlying investments in your SIPP.
They’ll vary depending on the investment type and fund manager.
For example, index tracker funds and ETFs (Exchange-Traded Funds) generally have lower fees compared to managed funds and investment trusts. This is mainly due to differences in how these investments are managed and the costs associated with them.
Passive investments, like index tracker funds and ETFs, require less active management and have lower trading costs, resulting in lower fees. On the other hand, actively managed investments, like managed funds and investment trusts, have higher fees due to the increased professional management resources and trading costs.
If you’re looking at investing in a particular fund, you can view the ongoing fund charges in the fund fact sheet or key investor information document (KIID).
On the other hand, ready-made portfolios might have an additional ongoing cost attached to them too, and managed portfolios an even higher one.
Weighing up the pros and cons of different investments and their costs is one of the biggest decisions when you’re investing in a SIPP.
Here’s a table with some more information about the different investment types you can hold a SIPP and their typical underlying charges:
| Investment | Typical Underlying Fees |
|---|---|
| Stocks and Shares | Trading fees, stamp duty (UK shares) |
| Managed Funds | 0.5% to 2%+ per year (management fees) |
| Index Funds | 0.03% to 0.5% per year (management fees) |
| ETFs | 0.03% to 0.5% per year (management fees) |
| Investment Trusts | 0.5% to 2%+ per year (management fees) |
| Ready-Made Portfolio | 0.2% to 1%+ per year (management fees) |
| Managed-Portfolio | 0.5% to 2%+ per year (management fees) |
| Bonds and Gilts | Trading fees, bid-ask spreads |
Dealing Fees
Dealing fees are costs you pay when buying or selling investments within your SIPP.
These fees can be a flat rate per transaction or a percentage of the trade value. Some providers may offer a certain number of free trades per month or year, and others offer discounted rates the more you trade.
Some platforms allow you to trade funds (unit trusts and OEICs) for free, while they charge for equity trades (shares, ETFs and investment trusts) as these are bought and sold on a live stock exchange and require more administration.
Stamp Duty on Shares
When purchasing shares electronically, you’ll encounter Stamp Duty Reserve Tax (SDRT). It’s calculated at 0.5% of the total value of the shares you’re snapping up. For example, on a £10,000 investment, you’d pay a £50 in SDRT.
Planning to buy shares in a foreign company? Stamp Duty usually doesn’t apply, but it’s worth checking local tax rules as they might be different.
Administration Fees
Administration fees are extra costs for specific tasks related to managing your account.
These tasks can include setting up your SIPP, changing your investments, or closing your account. Administration fees are most commonly charged as a flat fee, and you can find all of your SIPP provider’s fees in their terms and conditions.
Transfer Out Fees
If you decide to move your SIPP to another provider, you may be charged a transfer-out fee. This fee covers the costs of moving your investments and closing your account.
If you transfer as ‘cash’, your current provider will need to sell all of your investments for you and send the money to your new provider. It’s worth checking the cheapest way to instruct these sales (e.g., online vs over the phone or in the post) to make sure you are doing it cost-effectively.
If you choose to transfer ‘in-specie’, which means your stocks aren’t sold but are instead re-registered with your new provider, then it can get more expensive. The benefit is that you don’t miss out on any potential market gains and stay invested throughout your transfer, but it can often be much more expensive.
Withdrawal Fees
Once you reach retirement age and start withdrawing money from your SIPP, you may incur withdrawal fees. These fees can be a flat rate per withdrawal or a percentage of the amount withdrawn.
Some providers may offer a certain number of free withdrawals per year, and some allow for completely free withdrawals.
Financial Advisor Fees
If you decide to enlist the help of a financial advisor, you’ll need to factor in their fees. Financial advisors typically charge a percentage of your account balance, an hourly rate, or a fixed fee for their services.
For ongoing investment management, you can expect to pay between 0.5% to 1.5% of your portfolio value per year depending on the specific service.
Tips for Reducing SIPP Fees
If you’re looking to minimise the fees associated with your SIPP, here are some tips that could help:
Shop around
Comparing different SIPP providers is crucial. You might find that some providers have lower fees for the services or investment options you’re interested in. Weighing up your specific portfolio between different providers is really important.
Consider passive investments
Passive investments, like index funds or exchange-traded funds (ETFs), typically have lower fees compared to actively managed funds. These investments track the performance of a specific index, like the FTSE 100, and can be a cost-effective way to build a diversified portfolio.
Look for fee discounts
Some providers may offer discounts on fees if you have a larger pension pot or if you’re a frequent trader. Check with your provider to see if you’d be eligible for any discounts.
Be careful about frequent trading
Regular trading can be expensive, so unless you really know what you’re doing and are outperforming the fees with your investment decisions, it might be more cost-effective to pick investments for the long term and stick with them.
Consolidate your pensions
If you have multiple pension pots, consolidating them into a single SIPP could potentially reduce your overall fees (for example, you could benefit from the lower charges of a tiered fee structure if your portfolio reaches a certain value).
However, be cautious and make sure to check for any exit fees or potential loss of benefits before transferring.
How to Compare SIPP Fees
When comparing SIPP providers, it’s essential to consider not only the fees themselves but also the services and investment options they offer. Here’s a simple process to follow:
- Think about what you need from a SIPP provider, such as specific investment options, access to financial advice, or an easy-to-use platform.
- Look up several SIPP providers and gather information about their fees, services, and investment options.
- Make a side-by-side comparison of each provider’s fees. Consider both ongoing fees and one-off charges, such as dealing fees and administration fees.
- Don’t forget to consider the additional services each provider offers, such as financial advice, educational resources, or customer support.
- Choose a provider that meets your needs and offers competitive fees. Remember, the cheapest option may not always be the best fit, so weigh the costs against the value of the services and investment options provided.
FAQs
Is a SIPP Cheaper Than a Standard Pension?
A SIPP can be cheaper than a standard pension, depending on the fees associated with each.
Some SIPP providers offer lower fees for self-directed investors, while standard pension providers may charge higher fees for active management. It’s essential to compare fees and services to determine which option is more cost-effective for you.
Who Is the Cheapest SIPP Provider?
The cheapest SIPP provider will vary depending on your specific needs and investment choices. It’s essential to compare the fees of multiple providers and consider the value of the services they offer before making a decision.
What Is the Average Pension Fund Fee?
The average pension fund fee will depend on factors such as the type of pension, the provider, and the investment options chosen.
As a rough guide, actively managed pension funds may charge fees of around 1-2% per year, while passive funds, such as index trackers, may charge fees as low as 0.1-0.5% per year.
Always check the specific fees associated with your pension fund to get an accurate picture.
