If you’re looking to gain more control over your retirement savings, opening a SIPP (Self-Invested Personal Pension) could be the ideal move, especially for the self-employed.

With 45% of UK freelancers not saving for retirement, according to a 2023 report by the Association of Independent Professionals and the Self-Employed, a SIPP can be a game-changer.¹

It offers benefits like tax relief on contributions and a wide range of investment options, allowing you to tailor your pension portfolio to your financial goals and risk tolerance.

Ready to take charge of your retirement? Let’s dive into the 7 simple steps to get started.

What Is a SIPP (Self-Invested Personal Pension) and How Does It Work in 2025?

A SIPP is a type of personal pension that allows you to choose and manage your own investments, from shares and funds to commercial property. Unlike traditional pensions, SIPPs offer a broad investment universe and hands-on control, making them ideal for experienced investors and those seeking to tailor their retirement strategy.

For a comprehensive checklist on SIPP requirements and setup, visit the SIPP Requirements Checklist.

Why Open a SIPP in 2025? Key Benefits for Retirement Savers

You may open a SIPP if you’re looking for a versatile pension savings option and greater control over your retirement savings, as it makes for a flexible option for long-term financial planning.

However, it’s essential to weigh both the benefits and drawbacks to make an informed decision that aligns with your financial circumstances and retirement goals.

Let's check out the benefits and drawbacks:

Benefits of Opening a SIPP

The benefits of opening a SIPP encompass tax advantages, investment flexibility, and the ability to tailor your retirement strategy.

Let's look closer at the benefits:

• Tax Advantages: SIPPs provide substantial tax benefits, including tax relief on contributions, tax-free investment growth, and the ability to withdraw 25% of your pension as a tax-free lump sum upon retirement.² Additionally, SIPPs can offer inheritance tax advantages, helping you pass on more of your wealth to your beneficiaries.
• Investment Flexibility: SIPPs allow you to choose from a wide array of investment options, including stocks, bonds, mutual funds, and real estate. This flexibility enables you to tailor your portfolio to match your risk tolerance and financial goals, potentially leading to higher returns compared to more restrictive pension schemes.
• Customised Retirement Strategy: With a SIPP, you have the freedom to create a personalised retirement plan that suits your individual needs. Whether your focus is on growth, income, or a balanced approach, a SIPP allows you to adjust your strategy over time as your circumstances change.

Drawbacks of Opening a SIPP

Drawbacks of opening a SIPP include investment risks, management complexity and potentially high fees and charges.

Here's more on the drawbacks:

• Investment Risks: The broad range of investment options available with a SIPP also means increased risk. Market fluctuations can significantly impact the value of your investments, potentially affecting your retirement income.
• Management Complexity: Managing a SIPP requires a good understanding of investments and may involve regular monitoring and adjustments. This complexity can be time-consuming and challenging, especially for those without investment experience.
• Fees and Charges: SIPPs often come with higher fees and charges compared to traditional pension schemes. These costs, including management fees and trading fees, can eat into your overall returns, making it important to carefully consider the cost implications before opening a SIPP.³

Who Can Open a SIPP in the UK? Eligibility Rules for 2025

To open a SIPP in the UK in 2025, you must:

• Be a UK resident under the age of 75.
• Have relevant earnings or an existing pension to transfer.
• Provide proof of identity and address.
• Be comfortable making your own investment decisions or working with an adviser.

You can open a SIPP for a child (Junior SIPP), and non-earners can contribute up to £2,880 per year (topped up to £3,600 with tax relief).

Tax relief is available on contributions up to £60,000 or 100% of your earnings per year, whichever is lower. High earners may have a reduced allowance, and the minimum age to access funds is 55 (rising to 57 in 2028).

How to Open a SIPP in 7 Easy Steps: 2025 Guide

The steps to open a SIPP involve selecting a provider, completing the application, funding the account, choosing your investments, and actively managing your portfolio to optimise your retirement savings.

Each step is crucial for tailoring the SIPP to your financial goals, and by following these steps, you can ensure a smooth and well-organised process.

Let’s take a look at the 7 necessary steps:

Step 1: Do Your Homework & Compare Providers

Begin by researching and comparing different SIPP providers; look for one that offers the investment options you desire, has competitive fees, and provides excellent customer service.

Providers typically display their fees, terms, and key features on their websites, enabling you to make an informed decision.

Step 2: Understand Fees & Charges

Carefully review and understand the fees and charges associated with the SIPP provider, which may include setup fees, platform fees, annual administration charges, and trading costs.

Understanding these expenses is crucial for budgeting and ensuring the SIPP aligns with your financial goals.

Step 3: Consult a Financial Adviser

Consult a financial adviser who can provide tailored guidance based on your specific financial situation.

A SIPP offers a wide range of investment choices, and an adviser can help you navigate these options, assess risks, and create a strategy that aligns with your retirement plans.

They can also ensure compliance with regulatory requirements and tax implications.

Step 4: Complete Your Application Form

Once you’ve selected a provider, complete the application form; most providers offer an online application process that takes about 15 minutes.

Alternatively, you can request a paper application form.

Step 5: Provide the Required Documents

When applying, provide the necessary documents with your application, and note that you may need your debit card details for the initial deposit.

You'll typically be required to supply the following:

• Proof of identity (a passport or driving licence)
• Proof of address (a utility bill or Council Tax statement) 
• Your National Insurance number
• Your employer’s details (if they’ll be contributing to your SIPP)
• Your debit card details (if that’s how you’ll be making your opening deposit).

Step 6: Decide How You’re Going to Fund Your SIPP

Determine your SIPP funding strategy, whether through regular contributions, lump-sum payments, or transferring funds from existing pensions.

Ensure that your banking details are ready if you’re making regular contributions, and have the details of any pensions you plan to transfer.

Most importantly, if you’re transferring a Defined Benefit pension worth over £30,000 into a SIPP⁶, independent financial advice is legally required as it ensures you’re fully informed about the potential impacts and risks involved.⁷

Step 7: Choose Your Investment Options

Choose investment options that match your risk tolerance and financial objectives. Select from a range of assets, including stocks, bonds, funds, and property.

If you’re not an experienced investor, it’s advisable to consult a financial adviser to help you build a diversified and effective portfolio.

By following these steps, you can successfully open a SIPP tailored to your retirement needs, ensuring that your investments are well-managed and aligned with your long-term financial goals.

Common SIPP Opening Mistakes and How to Avoid Them

Opening a SIPP is a significant financial step. Avoid these common mistakes to protect your retirement savings:

• Neglecting to Compare Providers: Fees and investment options vary widely. Use comparison tools and read reviews before choosing.
• Ignoring Tax Allowance Rules: Exceeding annual or lifetime allowances can result in tax penalties. Stay informed about current limits.
• Overlooking Diversification: Concentrating on a single asset or sector increases risk. Build a balanced portfolio across asset classes.
• Failing to Review Regularly: Markets change, and so do your goals. Schedule annual reviews to keep your SIPP on track.
• Not Seeking Advice: If you’re unsure, consult a regulated financial adviser to avoid costly errors.

For a practical checklist, see the SIPPs Checklist.

Maximising SIPP Tax Relief in 2025

Tax relief is one of the most powerful features of a SIPP. Here’s how to make the most of it:

• Contribute Regularly: Even small, consistent contributions benefit from compounding and tax relief.
• Use Carry Forward: If you haven’t used your full allowance in the past three years, you can carry it forward to make larger contributions this year.
• Claim Higher-Rate Relief: If you pay higher or additional rate tax, claim extra relief through your self-assessment tax return.
• Non-Earners and Children: Even without earnings, you can contribute up to £2,880 per year (topped up to £3,600 with tax relief) for yourself or a child.

For more on SIPP tax relief, visit SIPP Tax Relief: 5 Powerful Benefits You Should Know.

Common Questions

In Conclusion

Opening a SIPP can provide substantial benefits, from tax advantages to enhanced control over your investments and the flexibility to tailor your retirement strategy to your unique financial goals.

To make the most of these benefits, take the time to conduct thorough research, understand the associated fees, and approach the application process with care. Choosing the right investment options is key to ensuring your SIPP aligns with your retirement aspirations.

By considering potential risks and seeking professional advice, you can confidently set up a SIPP that supports a secure and prosperous retirement.