Bank SIPPs: Which Banks Offer Them?

Bank SIPPs offer a convenient way to save for retirement, often featuring a range of investment options with varying risk levels to suit different investor profiles. Details vary by bank, reflecting differing investment strategies.
  • Last Updated: 22 Mar 2024
  • Fact Checked
  • Our team recently fact checked this article for accuracy. However, things do change, so please do your own research.

Contributors:

Francis Hui
Find Out Which Banks’ SIPP Are Worth a Look & Discover How Self-Managed Investments Could Transform Your Pension Savings & Retirement Strategy.
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Key Takeaways
  • Bank SIPPs offer pensioners the flexibility to choose their own investments, control over their assets, and potential for higher returns.
  • Transferring existing pensions into a Bank SIPP involves contacting your current provider, choosing a SIPP provider, and arranging the transfer with them.
  • The risks associated include a potential loss of investment, uncertainty of returns, and the responsibility of making investment decisions.
  • The tax benefits include tax relief on contributions up to certain limits, no tax on investment gains, and the ability to withdraw 25% tax-free at retirement.
  • Choosing the best bank for SIPPs in the UK involves comparing the fees, investment options, customer service, and online access offered by different providers.

Research compiled by the Pensions and Lifetime Savings Association in 2023 indicates that you and your significant other would need at least £55,000 a year to live ‘comfortably’ in retirement, which could mean a bank SIPP might be a viable retirement investment option.1

A SIPP, or Self-Invested Personal Pension, gives you the freedom to control your own retirement savings by allowing you to choose where to invest your hard-earned cash.

SIPPs provided by banks may enable investors to maximise their returns and receive tax benefits; however, it is always important to weigh the potential risks against the advantages before committing to a specific bank’s SIPP.

In This Article, You Will Discover:

    Whether you are a seasoned investor or just embarking on your pension savings journey, the experts at Every Investor have outlined important factors to consider when deciding on the right provider’s SIPP for you. 

    What Is a SIPP?

    A SIPP, or Self-Invested Personal Pension, is a type of personal pension plan in the United Kingdom that allows individuals to have greater control and flexibility over their retirement savings.

    With a SIPP, investors can choose from a wide range of investment options, including stocks, bonds, and other assets, offering a self-directed approach to managing their pension funds.

    What Is the Difference Between a SIPP & Other Pension Schemes?

    The difference between a SIPP and other pension schemes lies mainly in the degree of investment freedom afforded by each. 

    Unlike traditional pension schemes, where your employer or pension company makes the investment decisions, with a SIPP, you are in control. 

    In short

    A SIPP gives you more control and investment flexibility, allowing you to tailor your pension investments to your liking.

    Do Banks Offer SIPPs?

    Yes, banks offer different types of SIPPs, though it may be more common to find these products on the books of specialist providers.

    Choosing a SIPP provided by a bank or one provided by a specialist firm will come down to your individual needs and financial circumstances.

    Speak to a financial or pensions advisor to discuss your options and evaluate the variety of options on the market. 

    What Are the Benefits of SIPPs?

    The benefits of SIPPs, whether provided by a bank or specialist firm, include the fact that they give you control over your retirement investments.

    There are more benefits, which we will briefly discuss here.

    Control & Flexibility

    A SIPP puts you in the driving seat, with the ability to choose and manage your own investments from a wide range of options, including stocks, bonds, funds, and other financial instruments. 

    This means you will be able to tailor your investments to align with your risk tolerance, investment preferences, and long-term retirement goals.

    With a SIPP, you can invest in a wider range of assets than with many other pension schemes.

    Tax Efficiency

    Government rewards your retirement planning by offering tax relief on your contributions.

    Your investments can also grow in a tax-efficient manner, as any capital gains or income generated within the SIPP are generally untaxed.

    Thirdly, 25% of the total value of your SIPP can be withdrawn as a tax-free lump sum.

    Consolidation

    If you have multiple pensions, you can bring them together in one SIPP, making them easier to manage.

    This may allow for better visibility and easier management of your pension portfolio, reducing the administrative complexities and paperwork associated with managing multiple pensions.

    Access to Funds 

    From age 55, you can start withdrawing from your SIPP, with the first 25% lump sum being untaxed.2

    Remember

    Withdrawing any funds from your SIPP before that age will typically result in harsh financial penalties.

    Of course, these benefits need to be evaluated with reference to the potential drawbacks.

    Potential Risks & Drawbacks of SIPPs

    The potential risks and drawbacks of SIPPs include investment risks, fees and charges, and the complexity of this financial product.

    In this section, we will take a brief look at these risks and possible drawbacks. 

    Investment Risks

    There is always the risk of losing money invested in this way, as the stock market is subject to fluctuation.

    It is important to consider the level of risk and your investment knowledge before making decisions within your SIPP. 

    Fees & Charges

    SIPPs often come with higher charges than other pensions, which can eat into your investment returns.

    These can include annual management fees, transaction fees, custody fees, and charges for specific investment services. 

    It is crucial to understand a particular bank’s fee structure and compare that with other SIPP providers’ structures to ensure that the costs are reasonable and align with the value and services provided. 

    Complexity 

    SIPPs are far more complex than traditional pensions.

    Managing a SIPP requires a high level of investment knowledge and an understanding of financial markets. 

    It is important to educate yourself and seek guidance when needed to make informed investment decisions.

    If you are not comfortable handling your own investments, a SIPP may not be right for you.

    Accessing Funds & Penalties

    While you can access your SIPP at age 55, you will be taxed once you withdraw more than 25% of your pot. 

    Important

    If you access your SIPP before age 55, you will be subject to a hefty tax penalty.

    The only exception to this would be if you were forced to retire before 55 owing to specific circumstances such as serious ill health.

    Additionally, accessing funds from a SIPP may involve administrative processes and potential delays, depending on the specific bank’s procedures.

    Which Banks Offer SIPPs?

    Banks that offer SIPPs in the UK include several High Street firms. 

    Some of these banks are:

    • Barclays
    • Bank of Scotland
    • Halifax
    • Mansfield Building Society

    To give you an overview of what these institutions offer, we have compiled a summary of their SIPP offerings and fees. 

    Barclays

    Barclays charges 0,2% on funds and 0,1% on other investments, but you will not pay more than £125 a month. 

    You will be charged £3 for fund transfers and £6 for other investment transfers, and there is a quarterly administration fee of £31,25.

    Barclays was awarded Best SIPP Provider 2022 at the Shares Awards.3 

    Bank of Scotland

    The Bank of Scotland’s SIPP is also administered by AJ Bell.

    You will not be charged any holding fees, but there is a £9,50 dealing commission per trade.

    Bank of Scotland imposes a quarterly account charge of £22,50 on SIPPs worth up to £50,000 and £45 on those worth over £50,000.4

    Halifax

    The Halifax SIPP is also administered by AJ Bell, and as this bank is a division of Bank of Scotland, they offer the same product and charge the same fees.5 

    Mansfield Building Society 

    Mansfield Building Society offers SIPP cash deposit accounts, which allow you to save money but not buy stocks, shares or other investments. 

    There are four options to consider:

    • An Easy Access account at 2,00% AER*
    • A 30 days’ notice account at 2,25% AER*
    • A 90 days’ notice account at 3,00% AER*
    • A 180 days’ notice account at 4,50% AER*

    *These rates were accurate at 13/12/2023 but may have changed since our last update.

    These accounts have to be opened and operated on your behalf by a SIPP Scheme Administrator.6

    Choosing the Right Bank SIPP Provider For You

    Choosing the right bank SIPP provider comes down to understanding your needs and how those align with different banks’ offerings. 

    Factors to consider:

    • Charges & Fees: Be sure you understand the bank’s fee structure. This may include set-up fees, annual charges, dealing charges, and exit fees.
    • Investment Options: Check the range of investments on offer. A wider choice may allow you to diversify and tailor your portfolio to your risk appetite and goals.
    • Customer Service: Look for providers with a good reputation for customer service, including easy access to support when you need it. Use comparison websites, read customer reviews, and consider seeking advice from a financial advisor. 
    • If you plan to manage your SIPP online, check out the provider’s platform for ease of use, tools and resources on offer

    Keep in mind

    The best SIPP provider for you depends on your circumstances and investment goals.

    Speak to a qualified pensions advisor to clarify your options.

    How to Open a SIPP

    To open a SIPP once you have decided on the bank that best suits your needs, there will be certain steps to follow. 

    These usually include:

    • Checking the Eligibility Criteria: To open a SIPP, you must usually be a UK resident and under 75.7 Some providers may have additional requirements, so check these before you apply.
    • Submitting the Required Documentation: You will typically need your National Insurance number, bank account details, and the paperwork of any pensions you want to transfer to your new SIPP. You may also need your employment details.
    • Making Your First Investment: Most simple applications can be completed online in a matter of minutes. Once your account is open, you can start investing right away. Transferring any existing pensions may take longer, usually several weeks.

    SIPP Regulations & Protections

    SIPPs regulations and protections are applied in the UK to ensure the security and integrity of pension savings. 

    Regulatory Bodies

    The main regulator for SIPPs is the Financial Conduct Authority (FCA),8 while the Pensions Regulator9 also has some oversight.

    Banks must adhere to the FCA’s conduct of business rules, which are designed to promote fair and transparent dealings with customers. 

    Banks are also subject to prudential regulation like capital adequacy requirements and risk management standards, which aims to ensure that banks have appropriate financial resources and risk controls in place to protect their customers’ funds.

    Furthermore, banks offering SIPPs are expected to provide appropriate risk warnings and ensure that customers understand the nature of the investments they choose.

    In addition

    Providers must comply with the pension regulations set by the UK government, which apply to contribution limits, age restrictions for withdrawals, and tax rules.10 

    Investor Protection Schemes

    If your SIPP provider goes bust, the Financial Services Compensation Scheme (FSCS)11 can provide compensation of up to £85,000 for investment claims.12

    The FSCS is a statutory compensation fund that covers eligible deposits and investments if a bank or financial institution fails. 

    Complaints & Dispute Resolution

    If you have a complaint about your SIPP, you should first contact your provider. 

    If you are not satisfied with their response, you can escalate your complaint to the Financial Ombudsman Service.13

    Common Questions

    How Do Bank SIPPs Differ From Other SIPPs?

    Which Banks Offer SIPPs in the UK?

    Can I Transfer My Existing SIPP to a Bank SIPP?

    What Level of Customer Support Can I Expect from a Bank SIPP?

    Can I Manage My Bank SIPP Online or via an App?

    How Do Bank SIPPs Handle Pension Drawdowns?

    What Is the Minimum Investment for a Bank SIPP?

    Are Bank SIPPs Covered by the Financial Services Compensation Scheme?

    Can I Hold a Bank Account Within My Bank SIPP?

    What are the advantages of Bank SIPPs for pensioners?

    How to transfer existing pensions into a Bank SIPP?

    What are the risks involved with Bank SIPPs?

    Can you explain the tax benefits of Bank SIPPs?

    How to choose the best bank for SIPPs in the UK?

    In Conclusion

    In the dynamic UK retirement landscape, SIPPs have emerged as a powerful force. 

    These products offer you the control needed to shape your investments, paving the way for achieving your unique retirement goals. 

    However, it is important to consider suitability and to evaluate which type of provider would be best for you: a specialist provider SIPP or a bank SIPP.

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