In the world of retirement savings, Platform SIPPs (Self-Invested Personal Pensions) are reshaping the way individuals plan their retirement investments. 

Thanks to the growing popularity of online platforms, two in five Brits (42%) made investments in 2023, an increase from 36% in 2021.¹ 

Whether you are a seasoned investor or new to the world of retirement investing, this guide is designed to walk you through every aspect of Platform SIPPs.

EveryInvestor has delved deep into Platform SIPPs, rigorously researching the market to ensure that this article provides the most accurate and up-to-date information.

What Are the Benefits of Platform SIPPs for Retirement Savings?

Platform SIPPs (Self-Invested Personal Pensions) are a type of SIPP provide a multitude of benefits for retirement savings. They offer a wider range of investment options, including stocks, bonds, and mutual funds, giving you the opportunity to diversify your portfolio.

SIPPs also provide flexibility to control and manage your retirement funds directly, making it easier for you to adjust your investments in response to changing market conditions.

Moreover, Platform SIPPs typically offer lower charges compared to other pension schemes. They allow consolidation of your retirement savings, making it easier to monitor and manage.

Additionally, SIPPs are very tax-efficient, with relief on contributions and no capital gains or income tax on investments.

A unique feature of SIPPs is that you can withdraw 25% of your pension pot tax-free from age 55, providing an early access option.

What Is a Platform SIPP?

A Platform SIPP is a simplified version of the traditional Full SIPP that limits you to investment funds and shares but still allows you to manage and control your retirement savings.²

Some of the key features of Platform SIPPs are:

• Investment options include funds and shares.
• Investors usually do not have access to offshore funds, property, or unlisted shares.³
• Pension transfer options are generally allowed, so you can consolidate all your pension pots under one umbrella.⁴
• Platform SIPPs typically give you access to online tools and resources for research, analysis, risk assessment, and performance tracking.

How Are Platform SIPPs Different From Traditional Pension Plans?

Platform SIPPs are different from traditional pension plans mainly because they offer more flexibility and control, while traditional pensions are usually more restrictive and less transparent.

The main differences are:

• Control and Flexibility: SIPPs provide more control to the holder over where their pension funds are invested. This is ideal for those who want to be actively involved in managing their pension investments.
• Charges and Fees: SIPPs often have higher charges than other personal pensions because of the increased flexibility and investment options. These can include set-up fees, annual management charges, and transaction fees.
• Complexity: Owing to the wider range of investment options and the need for active management, SIPPs can be more complex to manage than other personal pensions.
• Suitability: SIPPs are generally more suitable for individuals with larger pension funds and at least a moderate level of investment experience, and those who want to actively manage their pension investments.
• Tax Treatment: The tax treatment of SIPPs is similar to that of other personal pensions, with tax relief on contributions and tax-efficient growth, but the specifics can vary depending on the investments chosen within the SIPP.

Remember, the right choice between a Platform SIPP and other personal pensions depends on individual circumstances, including your investment experience, the size of your pension fund, and the desired level of involvement in managing your pension investments.

How Do Platform SIPPs Work?

Platform SIPPs work by offering a simplified version of a traditional Self-Invested Personal Pension.

There are two options:

• DIY Platform SIPPs, where you manage your portfolio yourself.
• Robo-Investment Platform SIPPs, where an algorithm will make your investment decisions based on the information you provide.⁵

What Are the Pros of the DIY Approach?

The pros of the DIY approach to investing in a Platform SIPP include the level of control you will have.

Here are some more benefits:

• Control: You have complete control over your investments and can make decisions based on your own research and risk tolerance.
• Flexibility: You can choose from a wide range of investments, including funds, ETFs, shares, and bonds.
• Cost-effectiveness: You can invest without paying high fees for financial advice.

What Are the Cons of the DIY Approach?

The cons of the DIY approach include the heightened risk of failing to diversify your investments.

Consider these potential drawbacks:

• Time commitment: You will need to spend time researching and managing your investments.
• Risk: You are responsible for your own investment decisions, and there is a risk of losing money.
• Lack of diversification: If you are not careful, you could end up investing in too many of the same type of asset, which could increase your risk of losing money.

What Are the Pros of Using a Robo-Adviser?

The pros of using a robo-advisor to handle your Platform SIPP include the convenience aspect.

Here are some advantages to keep in mind:

• Convenience: Robo-advisors make it easy to invest, as they automate the process of selecting and managing investments.
• Low fees: Robo-advisors typically charge lower fees than traditional financial advisors.
• Diversification: Robo-advisors typically diversify your investments across a range of assets, which can help to reduce risk.
• Expert advice: Robo-advisors use algorithms and data to make investment decisions, which can help to ensure that your investments are aligned with your risk tolerance and goals.

What Are the Cons of Using a Robo-Adviser?

The cons of using a robo-advisor include the lower degree of flexibility you may enjoy when planning your investments.

Here are some potential drawbacks to consider:

• Limited control: You have less control over your investments than you would if you were investing on your own.
• Small investment minimums: Some robo-advisors have minimum investment amounts, which may be an obstacle for some investors.
• Limited flexibility: You may not have the flexibility to choose from a wide range of investments.
• Lack of human interaction: If you have questions or need help, you may not be able to get immediate assistance from a human advisor.

Benefits of Platform SIPPs

The benefits of Platform SIPPs range include a modern, flexible approach to retirement savings, providing you with tools and options to actively manage your pensions.

Besides the flexibility and control, investment choices, and transparency you would expect from SIPP products, a Platform SIPP has some unique benefits.

These include:

• Lower Costs: Platform SIPPs typically have lower fees and charges compared to Full SIPPs, making them more accessible to a wider range of investors.
• Ease of Use: Platform SIPPs are generally easier to manage with user-friendly online platforms, suitable for those who prefer a straightforward approach to pension management.
• Investment Range: While offering fewer investment options than Full SIPPs, Platform SIPPs still provide a wider range than standard personal pensions, including funds, shares, and bonds.
• Flexibility: These products offer the flexibility to change investments and manage them online, appealing to those who want some control over their pension investments without the complexity of a full SIPP.
• Tax Benefits: Like other pension schemes, they offer tax relief on contributions and tax-efficient growth of investments.
• Consolidation: Platform SIPPs allow for the consolidation of different pension pots, making it easier to manage and track retirement savings.

Platform SIPPs are particularly beneficial for individuals who seek a balance between investment choice and simplicity, without the need for extensive investment knowledge or the desire to invest in more complex assets.

Risks of Platform SIPPs

The risks of Platform SIPPs include investment risk and the impact of charges and fees. 

These are:

• Investment Risk: The value of investments can go down as well as up, meaning there is a risk of getting back less than you originally invested.
• Limited Investment Choices: Compared to Full SIPPs, Platform SIPPs offer fewer investment options, which might limit your ability to diversify your portfolio or invest in certain types of assets.
• Management Responsibility: You are responsible for choosing and managing your investments, which requires a level of financial knowledge and ongoing attention.
• Charges and Fees: While generally lower than those of Full SIPPs, fees and charges can still impact your investment returns, especially if not managed carefully.
• Market Volatility: Exposure to stock market fluctuations can affect the value of your pension pot, especially if your investment strategy is not aligned with your risk tolerance.
• Inflation Risk: Inflation may erode the real value of your savings over time, particularly if your investments do not keep pace with inflation.
• Regulatory Changes: Pension and tax rules are subject to change, which could affect the benefits and suitability of your SIPP.

It is important to consider these risks in light of your personal financial situation, investment experience, and retirement goals when deciding on a Platform SIPP.

Would a Platform SIPP Be Right For Me?

Deciding if a Platform SIPP would be right for you will include assessing if you have the experience and confidence necessary to manage your investments.

If you are unsure about your options, speak to a qualified financial or pensions advisor.

Choosing the Right Platform SIPP

Choosing the right Platform SIPP necessitates a thorough understanding of your investment goals and how hands-on you wish to be with managing your retirement savings.

What to Look Out for

When considering a Platform SIPP, you may want to consider fee transparency, investment diversity, the platform’s user-friendliness and security features, and the level of support you need to manage your portfolio.

Comparing Different Platform SIPP Providers

Comparing different Platform SIPP providers may take some time, but the importance of doing so cannot be overstated. 

Take a look at our snapshot of various providers to get started.

AJ Bell

AJ Bell is a well-known name in the UK pensions environment. 

A quick summary of what they offer:

• Fees: Platform fees range between 0% and 0,25% for funds and are capped at £10/month for shares. Trading fees are £1,50 for funds and vary between £4,95 to £9,95 for shares.
• USP: Offers a diverse array of funds and allows direct share investments. The platform’s costs are tied to the amount you have invested, and trading fees apply.

Fidelity

Fidelity offers a wide choice of investments. 

In a nutshell:

• Fees: Platform fees range from 0,2% to 0,35% for funds and will not exceed £7,50 per month for shares. Share trading costs are either £10 or £1,50 if part of a regular plan.
• USP: With a broad selection of investments, Fidelity aids customers with online tools and expert insights. They also run promotional offers like cashbacks for significant pension transfers.

Hargreaves Lansdown

Hargreaves Lansdown is another familiar name in the UK pensions landscape.

In short:

• Fees: For funds, platform fees range from 0,1% to 0,45%, and for shares, fees are 0,45% (or max £200/year). Share trading fees vary based on the number of trades.
• USP: Offers over 2,500 funds and ready-made master portfolios. They also provide detailed insights for those uncertain about their investment choices.

Vanguard

Vanguard is a Which? Recommended Provider for Self-Invested Personal Pensions and offers investment options in Vanguard funds.⁶

In short:

• Fees: Platform fee at 0,15% (max. £375/year). No fees for online trades unless you opt for an immediate trade at £7.50. No transfer-out fee.
• USP: Vanguard only offers its own funds, but it is a cost-efficient choice if you are comfortable with the specific range of funds tracking various global stock markets

*The information provided was accurate at the time of writing. However, details and figures may have since changed.

Always consult the respective platforms or financial advisors for the most current information.

What Are the Alternatives to a Platform SIPP?

The alternatives to a Platform SIPP include other types of SIPP, workplace pensions, and stakeholder pensions.

Common Questions

In Conclusion

Platform SIPPs offer you flexibility, control, and access to a diverse range of investment options. 

However, as with all investments, it is crucial to approach these products with a comprehensive understanding and a clear strategy. 

With their increasing prominence in the modern investment world, Platform SIPPs are becoming a cornerstone for many looking to optimise their retirement planning.