Best SIPPS for the Self-Employed: Who Offers Them?

The best SIPP for self-employed individuals offers flexibility in contributions and a wide range of investment options, accommodating the variable income and retirement planning needs unique to self-employment.
  • 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
Uncover the Flexibility, Tax Benefits, and Unique Features Tailored for Business Owners Like You. Join Us as We Navigate the Options to Secure Your Retirement Dreams.
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Key Takeaways
  • The best SIPP for the self-employed is one that offers flexibility and low fees.
  • When choosing, consider factors such as investment options, fees, and customer service.
  • Some of the providers that offer the best options are AJ Bell Youinvest, Hargreaves Lansdown, and Interactive Investor.
  • Key features to consider include investment choices, fees and charges, customer support, and online functionality.
  • There are options specifically tailored for self-employed individuals, such as the self-invested personal pension (SIPP) and the small self-administered scheme (SSAS).

Finding the best SIPP for the self-employed could make a big difference to your financial planning, especially considering that, according to a 2022 Parliamentary report, only about 16% of this demographic are actively saving for retirement.1 

This lack of retirement planning is alarming yet understandable given the complex financial landscapes that self-employed professionals navigate. 

Self-Invested Personal Pensions (SIPPs) offer a level of flexibility, control over investments, and tax efficiency that make them particularly well suited to you if you are your own boss.

In This Article, You Will Discover:

    To help you make an informed decision, Every Investor has meticulously researched the ins and outs of the subject to bring you accurate and up-to-date information on the best SIPP for the self-employed.

    What Is a SIPP?

    In the UK, a Self-Invested Personal Pension (SIPP) presents a customizable approach to retirement planning, empowering savers to directly manage and choose their pension investments.

    This platform extends the liberty to incorporate a variety of assets, such as equities, bonds, collective investments, and commercial real estate, into their retirement strategy.

    It’s designed to align with personal financial aspirations and risk capacity, offering a bespoke portfolio management experience.

    Why Consider a SIPP If You Are Self-Employed?

    If you are self-employed, you may consider a SIPP because it offers flexible contributions that suit those earning an unpredictable income. 

    Additionally, SIPPs provide investment autonomy with diverse options aligned to your risk preferences, and the potential for tax relief can effectively reduce your taxable income, resulting in significant savings.

    Remember

    Investments are inherently risky and the value of your SIPP may decrease as well as increase over time. 

    Which Are the Best SIPPs If You Are Self-Employed?

    The best SIPPs if you are self-employed should offer varying levels of investment flexibility and support, so assessing their features, pros, and cons will help you make an informed decision tailored to your situation.

    PensionBee

    PensionBee offers eight pension plans, each tailored to particular needs.2 

    The firm’s website also actively encourages the self-employed to consider consolidating old pensions or start a new one.3 

    Pros:

    • Assists with pension consolidation into one manageable account.
    • Contributions are flexible to accommodate fluctuations in your income.
    • One annual fee ranging from 0,50% to 0,95% depending on your chosen plan with 50% off on the portion of your pension over £100k.4

    Cons:

    • Predetermined plans may not suit those seeking highly personalised options.
    • No financial advice.
    • Fees can be high for small pension pots.

    Nutmeg

    Nutmeg, an established robo-advisory firm, caters to individuals seeking simplified automated investing with diverse portfolio choices with a minimum initial investment of £500.5

    Nutmeg offers four ‘investment styles’: Fully Managed, Fixed Allocation, Smart Alpha, and Socially Responsible.

    Pros:

    • Access to free financial guidance.
    • Provides valuable educational materials and efficient goal-planning tools.
    • Easy-to-use app and desktop platforms.

    Cons:

    • Fees are tiered, ranging from 0.75% to 0.25%,6 making it expensive for smaller pension pots.
    • Offers only a drawdown service for retirement; not suitable for those seeking annuities.
    • Being owned by JP Morgan, an institution still disentangling itself from fossil fuel investment, might raise concerns for socially responsible investors.7

    AJ Bell

    AJ Bell’s offering is a traditional SIPP with comprehensive investment options and user-friendly tools, including a mobile app

    The cost for holding your investments is 0,25% on the first £250,000, 0,10% on the next £250,000, and no charge on the portion over £500,000 (if applicable).8 

    Pros:

    • This SIPP allows access to an extensive array of shares, funds, and investment choices, offering flexibility in crafting your portfolio.
    • You can contribute from as little as £25 per month to a maximum of 100% of your annual earnings.9
    • The online platform is intuitive and easy to navigate, allowing for straightforward portfolio management.

    Cons:

    • This is not a robo-advisor SIPP, so as a self-employed person, you may find it difficult to find the time to manage your SIPP investments.
    • Opting for a financial advisor can incur additional costs.
    • Trading shares costs £9,95 each, which can make the endeavour quite a pricey one, but this charge drops to £4,95 if you performed more than 10 transactions the previous month.10

    Interactive Investor

    Interactive Investor is one of the few providers that offers a fixed monthly fee (as opposed to a percentage-based charge). 

    This charge is currently £12,99 on its Pension Builder Plan.11

    This SIPP offers over 40,000 investment options and five ready-made plans.

    Pros:

    • Fixed fees are beneficial to larger pension pots. 
    • Fixed fees are relatively easy to keep track of.
    • Easy-to-navigate app.

    Cons:

    • The flat fee structure might be costly for individuals with smaller portfolios.
    • Fund trading fees tend to be high.
    • Charting tools are limited.

    Penfold

    The Penfold SIPP was originally designed with the self-employed in mind, with four investment options available: Standard, Lifetime, Shariah, and Sustainable.

    This provider offers an all-in-one fee structure: 

    • on the standard plans, the charge is 0,75% on savings up to £100,000 and 0,4% on the portion exceeding £100,000
    • on the Sharia plan, the rate is 0,88% for portfolios up to £100,000 and 0,53% on the portion beyond that.12

    Pros:

    • Highly flexible contributions make it easy to adapt your savings to your fluctuating income.
    • All-in-one fee structure simplifies costs by combining admin and fund manager charges.
    • The ‘Explore your pension’ feature offers transparency in fund allocation.

    Cons:

    • Some funds are managed by BlackRock, whose fossil fuel investment may not meet some investors’ sustainability objectives.13
    • Does not offer financial advice, making it less ideal for those new to pension planning.
    • Being low-cost may mean a relatively limited range of investment options.

    Bestinvest

    BestInvest’s Best SIPP comes with low fees and a broad range of investment options, which may appeal to the self-employed. 

    On the firm’s ready-made plans, charges are: 

    • 0,2% on investments up to £500,000
    • 0,1% on the portion between £500,000 and £1 million
    • no fee on the portion over £1 million.14

    Pros:

    • Free individual coaching is available to enhance your investing skills.
    • Will pay up to £500 towards your exit fees when you transfer at least £50,000 to your new Bestinvest SIPP.15
    • Low platform fees on ready-made plans and no trading fees on US shares.16

    Cons:

    • Limited range of stocks, restricting global diversification.17
    • Relatively high platform charges on self-invested portfolios.18
    • No demo account.

    Hargreaves Lansdown

    The Hargreaves Lansdown SIPP offers a flexible retirement saving solution for self-employed individuals.

    The annual admin fee starts at 0,45% and decreases to 0% for the portion of your portfolio over £2 million.19

    Pros:

    • There are more than 2,500 investment options to choose from.
    • 24/7 access to your account through a user-friendly online platform and app.
    • Buying and selling funds is free.

    Cons:

    • Admin charges can be expensive for smaller pension pots.
    • Buying and selling shares can be costly.
    • Financial advice comes at an extra cost.

    Moneyfarm

    The Moneyfarm robo-advisory personal pension is not a true SIPP as it only offers exchange-traded funds in ready-made portfolios.

    It does, however, offer the same tax relief as a SIPP.

    Pros:

    • A personal investment consultant is available to offer free financial advice on choosing your portfolio.
    • One inclusive management fee based on a percentage of your investments starting at 0,75% for your first £10,000.20
    • User-friendly, intuitive app.

    Cons:

    • The platform only offers exchange-traded funds (ETFs), which may not be suitable for those looking for a broader range of investment options.
    • A minimum investment of £500 could be a barrier for self-employed individuals.
    • Tiered fee structure may be high for smaller pension pots.

    What Criteria Did We Use to Choose the Best SIPPs for the Self-Employed?

    Our criteria for choosing the best SIPPs for the self-employed focused on a balanced evaluation of fees and charges, the range of investment options and flexibility, and the account features designed to support individual financial goals.

    How Do You Choose the Best SIPP If You Are Self-Employed?

    To choose the best SIPP if you are self-employed, it is essential to consider several key factors tailored to your individual financial situation, investment knowledge, and retirement goals. 

    Here is a step-by-step guide to help you make an informed decision:

    • Understand Your Retirement Needs: Start by estimating the income you will need in retirement. Consider your lifestyle, expected living costs, and any other income sources you might have in retirement, like state pensions or other savings.
    • Assess Your Investment Knowledge: SIPPs offer a wide range of investment choices, including stocks, bonds, and funds. If you are confident in making investment decisions, a SIPP can be a good way to take control of your retirement savings. If not, you might prefer a SIPP provider that offers advice or pre-selected investment portfolios.
    • Compare Fees and Charges: SIPPs come with various fees, including set-up charges, annual management fees, and transaction fees. Ensure you understand the fee structure as it can significantly impact your investment returns over time.
    • Check Investment Options: Ensure the SIPP provides a wide range of investment options that suit your investment strategy and risk tolerance. Some SIPPs offer access to international markets, ethical investments, or commercial property.
    • Consider Flexibility and Access: Think about how often you want to contribute and whether you might need to vary your contributions. Some SIPPs allow flexible contributions, which can be beneficial if your self-employed income fluctuates.
    • Read Reviews and Ask for Recommendations: Look for customer reviews and ratings of different SIPP providers. You can also ask for recommendations from fellow self-employed individuals or financial advisors.
    • Get Professional Advice: If you are unsure, consider seeking advice from a financial advisor. They can provide personalised advice based on your financial situation and help you navigate the complex landscape of pensions and investments.

    By carefully considering these factors, you can choose a SIPP that aligns with your financial goals and provides a solid foundation for your retirement. 

    Remember, the best SIPP for you is one that fits your individual needs, offers flexibility, and maximises your retirement savings in a cost-effective way.

    What Are The Alternatives to SIPPs for Self-Employed People?

    Alternatives to SIPPs for self-employed people include standard personal pensions, stakeholder pensions, and NEST pensions, each with its own set of features, benefits, and limitations.

    Standard Personal Pension

    A standard personal pension is a more traditional retirement savings product that typically offers a narrower range of investment options than a SIPP. 

    Managed by pension companies, these plans often come with a predetermined set of funds you can invest in.

    Stakeholder Pension

    Stakeholder pensions are designed to be simple and low cost, making them accessible to people with varying levels of income and financial knowledge. 

    With this type of plan, your contributions are invested on your behalf, making them a potentially good fit for those who prefer not to be hands on when it comes to managing their pension. 

    These retirement plans are required to adhere to governmental guidelines concerning fees and terms and conditions.

    NEST Pension

    The National Employment Savings Trust (NEST), initiated by the UK government as an employment-based pension scheme, is also available to self-employed pension savers. 

    With its simple yet limited array of investment choices and low fees, NEST serves as a practical choice for those in search of an uncomplicated, affordable retirement plan.

    Common Questions

    Is a SIPP a Good Idea If You Are Self-Employed?

    What Are the Alternatives to SIPPs for Self-Employed People?

    Do I Need a Private Pension If I Am Self-Employed?

    How Much Can I Pay Into a SIPP If I Am Self-Employed?

    Do I Get Tax Relief With a SIPP If I Am Self-Employed?

    What Is the Best SIPP for the Self-Employed?

    How Do Self-Employed Individuals Choose the Best SIPP?

    Are There Special Features in the Best SIPP for Self-Employed?

    Can the Best SIPP for the Self-Employed Offer Tax Benefits?

    In Conclusion

    Choosing the right retirement plan is an essential component of financial security, particularly for those who do not have the benefit of an employer-sponsored pension. 

    The flexibility, investment control, and tax advantages of a SIPP make it an attractive option for freelancers, entrepreneurs, and other self-employed individuals. 

    By diligently researching and comparing the various offerings, you can find a SIPP that aligns with both your financial goals and your work lifestyle. 

    Ultimately, the best SIPP for the self-employed is one that allows for maximum potential growth while also providing a level of contribution flexibility that would benefit those who may not receive a regular income.

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