When planning for your retirement, you might be wondering whether a SIPP vs personal pension is the better option for you. 

This guide will help you understand the ins and outs of both types of pensions, exploring their pros, cons, and how they differ from one another. 

We’ll also answer some frequently asked questions.

What is a SIPP?

A Self-Invested Personal Pension (SIPP) is a type of pension scheme that offers you more control over how your retirement savings are invested. 

SIPPs were introduced to provide a more flexible alternative to traditional pension schemes for those who wanted to have a hands-on approach to their investments.

With a SIPP, you can choose from a wide range of investment options such as:

  • Stocks and shares
  • Investment trusts
  • Unit trusts
  • Open-Ended Investment Companies (OEICs)
  • Exchange Traded Funds (ETFs)
  • Government and corporate bonds
  • Commercial property
  • Ready-made and managed portfolios

This flexibility allows you to create a bespoke investment portfolio that suits you.

You can also make adjustments to your investments as your circumstances change or as you approach retirement.

SIPPs are particularly well-suited for experienced investors who are comfortable making their own investment decisions and are willing to dedicate time and effort to managing their portfolios. 

However, with the rise of managed and ready-made portfolios and robo-advisors, even less experienced investors can access and manage SIPPs more easily.

What is a personal pension?

A personal pension is a more straightforward pension plan typically offered by insurance companies, banks, and other financial institutions. 

Personal pensions are designed for those who prefer a more hands-off approach to retirement saving, as your provider handles all your investment decisions for you.

When you open a personal pension, you’ll typically be offered a choice of a few risk-based funds, such as low-risk, medium-risk, or high-risk funds. 

These funds are managed by professional investment managers who make all the necessary decisions regarding asset allocation, stock selection, and risk management.

Once you’ve chosen your preferred fund, you’ll make regular contributions to your personal pension, which will then be invested on your behalf. 

Your pension provider will keep you updated on the performance of your investments, and you can switch between funds if you feel the need to change your investment strategy.

However, the number of investment options available to you is usually much more limited compared to a SIPP. 

What are the main differences?

There are several key differences between SIPPs and personal pensions that you should consider when deciding which option is best for you. 

Here’s a table that summarises the key ones: 

FeatureSIPP (Self-Invested Personal Pension)Personal Pension
Investment ChoiceWider range of options, more control over portfolioLimited options, less control over portfolio
FlexibilityMore flexible contribution options (varying amounts, lump-sums, breaks)More rigid contribution requirements
CostsHigher fees (platform fees, dealing charges, ongoing fund management costs)Lower management fees, fewer investment choices
ControlGreater control over investments, hands-on approachProvider makes investment decisions, hands-off approach
AccessWider range of online tools and platforms for managing investmentsLimited access to online tools, varies by provider
ConsolidationAllows consolidation of multiple pension potsAllows consolidation of multiple pension pots

And here’s a more detailed breakdown of each of these differences:

Investment choice

SIPPs offer a much wider range of investment options compared to personal pensions. 

This increased choice allows you to have more control over your portfolio and align your investments with your risk tolerance and financial objectives.


SIPPs generally provide more flexibility in terms of contributions

You can vary the amount you contribute, make lump-sum contributions, or even take a break from contributing if you need to. 

Personal pensions often have more rigid contribution requirements, which can be a drawback if your financial situation changes.


SIPPs tend to have higher fees and charges due to the additional investment options and the need for you to manage your investments. 

These fees can include platform fees, dealing charges, and ongoing fund management costs. 

On the other hand, because you can choose your own investments, you can pick investments that have lower ongoing fund charges and costs themselves. 

For example, ETFs and tracker funds have low management costs as they simply track an index, so they’re much cheaper than managed funds. 


With a SIPP, you have more control over your investments and can make adjustments as needed. 

This can be an advantage if you’re confident in your investing abilities or want to have a more hands-on approach to your retirement savings. 

With a personal pension, the provider makes the investment decisions on your behalf, which may be more appealing if you’re less confident or don’t have the time or knowledge to manage your own investments.


SIPPs often come with a wider range of online tools and platforms that make managing your investments more accessible. 

Tools and features such as stop losses (designed to limit your losses on a particular investment holding) and limit orders can help you manage your investments more effectively.


Both SIPPs and personal pensions allow you to consolidate multiple pension pots into a single account. This can make managing your retirement savings simpler and help you keep track of your investments.

What are the pros and cons of a SIPP?


  1. The extensive range of investment options available within a SIPP allows you to tailor your portfolio to your specific needs, risk tolerance, and long-term objectives.
  2. A SIPP gives you more control over your investments, which can be appealing if you’re confident in your ability to manage your own retirement savings or want to take a more active role in your investment strategy.
  3. Like all pension schemes, SIPPs offer tax relief on contributions. This means the government tops up your contributions based on your income tax rate, effectively giving you a “free” boost to your retirement savings.
  4. SIPPs allow you to adjust your contributions, take a break from contributing, or even transfer other pensions into your SIPP. This can be beneficial if your financial situation changes or you want to consolidate your pension savings in one place.
  5. SIPPs can be an effective estate planning tool, as they can be passed on to your beneficiaries free of inheritance tax, subject to certain conditions.


  1. The increased investment options and the need for you to manage your investments mean that SIPPs often come with higher fees than personal pensions. These fees can eat into your returns, especially if you’re not actively managing your portfolio.
  2. With a SIPP, the responsibility of making investment decisions falls on you, which can be overwhelming for some people, particularly those with limited investment knowledge or experience.
  3. The wider investment options available within a SIPP mean that you could potentially take on more risk than with a personal pension. However, this ultimately depends on your investment choices and risk tolerance.

What are the pros and cons of a personal pension?


  1. Personal pensions are easy to set up and manage, making them suitable for those who prefer a hands-off approach or have limited investment knowledge.
  2. Your investments are managed by professionals, so you don’t need to worry about making investment decisions or monitoring your portfolio.
  3. Personal pensions generally have lower fees compared to SIPPs, as there are fewer investment choices and your investments are professionally managed.
  4. Like SIPPs, personal pensions also offer tax relief on contributions, giving you a government top-up based on your income tax rate.
  5. Personal pensions often encourage regular contributions, which can help you develop good saving habits and benefit from the power of compounding over time.


  1. Personal pensions offer fewer investment options compared to SIPPs, which can be restrictive if you want more control over your portfolio or prefer a more diverse range of investments.
  2. Personal pensions may have stricter contribution requirements and less flexibility when it comes to changing contributions or taking a break from contributing.
  3. With a personal pension, the provider makes investment decisions for you, which may not be suitable if you prefer to manage your own investments or want more control over your portfolio.

Can you have a SIPP and a personal pension?

Yes, you can have both a SIPP and a personal pension.

Many people choose to have a combination of the two to benefit from the pros of each type of pension. 

By diversifying your retirement savings, you can strike a balance between the control and flexibility offered by a SIPP and the simplicity and professional management of a personal pension.

Is SIPP better than a workplace pension?

It’s essential to consider your individual circumstances when deciding whether a SIPP or a workplace pension is better for you. 

Workplace pensions often come with employer contributions, which can significantly boost your retirement savings, but not all SIPPs can facilitate this.

Additionally, workplace pensions are typically lower cost and have a hands-off approach, with investment decisions made by professionals.

However, if you’re someone who prefers more control over your investments and wants access to a wider range of investment options, a SIPP might be a better fit. It’s also worth noting that you can have both a workplace pension and a SIPP, allowing you to take advantage of the benefits of both.


Are SIPPs high risk?

SIPPs themselves aren’t inherently high-risk, but the level of risk depends on the investments you choose within your SIPP

As SIPPs offer a wider range of investment options, there’s potential for higher risk if you opt for riskier assets. 

It’s important to assess your risk tolerance and choose investments that align with your financial goals and risk appetite.

Can a SIPP go bust?

While it’s unlikely for a SIPP provider to go bust, it’s not impossible. 

If your SIPP provider does go bust, your investments are usually protected up to a certain limit by the Financial Services Compensation Scheme (FSCS). 

Also, investor money is legally required to be ring-fenced by SIPP providers so that they can’t use it to pay off their own creditors and debts. So even if your provider does go bust, your SIPP shouldn’t normally be affected.

How much do I need in a SIPP to retire?

The amount you need in a SIPP to retire depends on various factors, such as your desired retirement income, life expectancy, and other sources of income. 

As a general rule of thumb, experts often suggest aiming for a retirement income of around two-thirds of your pre-retirement salary to maintain your current lifestyle. 

It’s important to consider your individual circumstances and seek professional advice if needed.