SIPP Costs & Charges: How Can You Boost Savings?

Fees and charges for SIPPs can include annual management fees, transaction charges, and potentially adviser fees. It's important to compare providers to ensure cost-efficiency.
  • 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
Discover the Typical Fees and Charges on a SIPP, Find Out How to Make Sure Your SIPP Costs Are Covered, and Learn About the Government Taxes and Levies That Apply to Your SIPP.
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Key Takeaways
  • Common SIPP fees and charges typically include set-up fees, annual management fees, dealing charges, and withdrawal fees.
  • Reducing SIPP fees and charges can be achieved by comparing different providers, negotiating on charges, or consolidating your pensions.
  • While most SIPP fees are disclosed upfront, there might be hidden costs like inactivity fees or exit charges, making it vital to thoroughly read your agreement.
  • The amount of SIPP fees and charges are influenced by factors like the size of your pension pot, the type of investments you hold, and the provider’s fee structure.
  • High SIPP fees and charges can significantly reduce the value of your retirement fund over time by eating into your investment returns.

Fees can make a considerable dent in your self-invested personal pension (SIPP), which is why it’s important to know exactly what SIPP fees and charges you should look out for.

Did you know that, according to research conducted by Profile Pensions in 2020, UK pension holders were paying on average more than five times the amount they should be in fees and charges?1

In This Article, You Will Discover:

    In an effort to save you time, Every Investor’s team of experts has collected the essential facts about SIPP fees by researching the costs associated with a variety of SIPP products on the market today.

    Our content undergoes extensive quality and compliance checks before publication, and all our articles are regularly updated to make sure you’re getting relevant and useful information.

    Read on to find out what you need to know about SIPP fees.

    What’s a SIPP?

    Self-Invested Personal Pensions (SIPPs) enable account holders to tailor their pension portfolios, providing a hands-on approach to retirement planning with the potential for higher returns.

    What Are the Common SIPP Fees and Charges in the UK?

    SIPP fees and charges in the UK can be broadly categorized into set-up fees, annual management charges (also known as administration fees), dealing charges, exit fees, and transfer fees.

    Set-up fees are incurred while opening your SIPP, whereas annual management fees are usually a percentage of your SIPP balance.

    Dealing charges are applied per transaction when you buy or sell investments, while transfer fees may be charged when moving your SIPP to another provider.

    Additional charges can also arise from holding certain types of investments.

    For instance, some providers levy extra fees for holding individual stocks and shares or commercial property.

    Remember, the exact nature and quantum of these fees can vary widely between providers, and it’s worth taking the time to compare your options.

    Also note that some providers offer tiered pricing structures, where the charges decrease as your portfolio size increases.

    In summation, a SIPP’s cost-effectiveness will depend on your individual investment choices and the size of your fund.

    Why’s It Important to Understand SIPP Fees & Charges?

    Understanding SIPP fees and charges is crucial for making informed decisions, avoiding unexpected costs so you can make the most of your retirement savings.

    Each unnecessary fee diminishes your long-term retirement investment. 

    What are the Types of SIPP Fees & Charges?

    The types of SIPP fees and charges that investors should be aware of range from set-up fees to annual administration and investment management fees. 

    Let’s take a closer look at these charges:

    • Set-up fees: Initial SIPP costs vary among providers, so comparing is vital. Optimal quality and cost balance should guide your choice.
    • Annual admin fees: These cover SIPP maintenance, resembling a yearly service fee for your retirement plan.
    • Investment management fees: These are paid to fund managers overseeing SIPP investments. Different SIPP providers may call their charges and fees by different names, which may lead to some confusion when you try to compare SIPPs.

    What Are Typical SIPP Setup Fees?

    Typical SIPP setup fees will depend on your provider, and you’ll find that some providers won’t actually charge you to open a SIPP.

    Here’s an illustration of setup fees you may expect from a selection of providers:

    • AJ Bell doesn’t charge a setup fee for online applications, but will charge you £120 for a paper application.2
    • Most providers, including the likes of Hargreaves Lansdown3, Nutmeg4, ii5, and Freetrade6, don’t charge a SIPP setup fee.

    What Are Typical SIPP Admin Fees?

    Typical SIPP admin fees vary greatly between providers, so it’s important to investigate your particular provider’s fees before signing an agreement. 

    Here are some examples of SIPP admin fees: 

    • Fidelity charges £90 per year or 0,35% on investments under £25,000 if you also hold a savings plan.7
    • AJ Bell charges £180 to £260 per year depending on the value of your investment.8
    • Vanguard charges a 0,15% yearly admin fee on investments up to £250,000.9

    What Are Typical SIPP Investment Management Fees?

    Typical SIPP investment management fees include trading fees, foreign exchange charges, withdrawal fees, and others.

    Here’s a quick summary of the management fees you could expect to pay:

    • Trading fees: Trading fees are the costs you pay each time you make a trade within your SIPP, similar to paying a commission to your broker.
    • Transfer fees: Moving your pension from one provider to another may incur transfer fees. 
    • Income drawdown and annuity purchase fees: Income drawdown’s a way of taking money out of your pension to live on during retirement, with costs like an annual management charge and withdrawal fees. Annuities guarantee a lifelong income, purchased with your pension pot. 

    Let’s take a look at a brief illustration of the range of investment management fees charged by some providers:

    • AJ Bell charges £60 for asset transfers from other pension funds, but doesn’t charge anything for cash transfers. This provider also charges a once-off income fee of £25 or £75 depending on whether you’re receiving a one-off drawdown income amount or requesting a lump sum payment. Annual drawdown charges are £150 or £250 depending on your income arrangement.10 
    • Trading shares and funds with ii costs £5,9911 and you won’t pay anything to withdraw your pension when you retire.12
    • Hargreaves Lansdown charges between £5,95 and £11,95 per share deal (depending on your previous month’s activity), but doesn’t charge for outbound transfers.13
    • If you want to use Vanguard’s quote and deal service to deal in Exchange Traded Funds, you’ll have to pay £7,50 per trade, but there’s no charge for withdrawing funds.14

    How Are SIPP Charges Paid?

    SIPP charges are usually paid through a deduction from the cash held in your platform account via automated debit orders.15

    If there’s not enough cash in your account, your SIPP provider may try to collect the charges using any bonuses on investments you’ve received16, or by selling some of your shares and funds.17

    What Government Levies & Taxes Are Applied to SIPPs?

    Government levies and taxes applied to SIPPs may include (UK or Irish) Stamp Duty, the Financial Transaction Tax, and the UK Panel on Takeover and Mergers (PTM) and Irish Takeover Panel levies.18

    Let’s take a look at these charges and levies.

    Stamp Duty

    Stamp Duty will be levied when you buy UK-based shares.19 

    This works in one of two ways:

    • If you buy shares electronically, you’ll pay 0,5% of the trade value in what’s known as Stamp Duty Reserve Tax (SDRT).20
    • If you buy shares through a stock transfer form,21 you’ll pay 0,5% of the trade value in Stamp Duty if the trade’s worth more than £1,000.22

    When it comes to non-UK shares:

    • You usually won’t have to pay SD or SDRT if you’re buying shares from outside the UK.23
    • However, Stamp Duty on stock registered in Ireland’s currently charged at 1%.24

    Financial Transactions Tax

    Financial transactions tax may be payable on some exchange-traded instruments from abroad, such as the 0,2% tax levied on instruments located in Spain.25

    PTM (Panel of Takeovers & Mergers) Levy

    A PTM Levy may be applicable to deals in UK companies’ securities worth more than £10,000.26 

    Did you know?

    The Takeover Panel’s the UK regulatory authority in charge of administering the Takeover Code and ensuring the fair treatment of all shareholders.27

    Do Fees Have an Effect on SIPP Performance?

    Fees have an effect on SIPP performance and may reduce the amount of money saved in your pot.

    Over time, even seemingly small fees can compound, leading to a substantial reduction in the overall value of the pension pot.

    For example, if a SIPP generates a return of 5% but has total fees of 1%, the net return would be reduced to 4%. 

    How Can I Reduce the Impact of Fees on My SIPP?

    You can reduce the impact of fees on your SIPP by making strategic investment choices and investigating fee discounts, reductions, and caps.

    Here’s a more thorough explanation of how to go about that. 

    Reducing Fee Impact Through Investment Choices

    You can reduce the impact of SIPP fees through strategic investment. 

    By carefully considering the investment options within your SIPP, understanding the associated fees, and aligning your choices with your risk tolerance and financial goals, you can potentially mitigate the effect of fees on your overall returns. 

    Here’s how:

    • Choose low-cost funds: Index funds or ETFs often have lower fees than actively managed funds. If suitable for your investment strategy, these options could reduce your overall fee burden.
    • Avoid excessive trading: Transaction fees can add up quickly, so avoiding unnecessary trades and adopting a more buy-and-hold strategy may lower costs.
    • Understand the fee structure: Know what your are being charged for and why. Some investments within SIPPs may have complex fee structures. 
    • Monitor your investments: Regularly reviewing your investments and the associated fees can help you identify areas where you may reduce costs without compromising your investment strategy.
    • Consider alternative investment options: If fees are consistently high, you may explore other investment platforms or products that meet your needs at a lower cost.
    • Seek professional advice if needed: A financial advisor who understands SIPPs can help you navigate the various fees and investment options to create a strategy that aligns with your goals while minimising costs.

    Strategic investment does not necessarily mean avoiding all fees, as sometimes paying a fee for a specific service or investment product may be justified. 

    However, by being proactive and informed, you can make decisions that align with your financial goals while minimising unnecessary expenses.

    In short

    It’s essential for investors to be aware of all the fees associated with their SIPP and to consider those costs when evaluating the performance and suitability of their pension strategy. 

    Sometimes, lower-cost alternatives may offer similar investment opportunities, making it worthwhile for investors to shop around and carefully assess the fee structure of any potential SIPP provider.

    Discounts & Fee Reductions

    Certain providers, like Vanguard28 and Fidelity29, offer discounts and fee reductions on larger portfolios. 

    In other words, the more you invest with some SIPP providers, the less you may end up paying in fees proportionally.

    Fee Caps & Minimums

    Some providers set a maximum fee (or fee cap), which represents the highest amount you could potentially be charged in fees, or a minimum fee, which represents the lowest amount you’ll definitely be charged.

    This is how they work:

    • If a provider caps its annual fee at £200, you may pay less than that amount per year, but you will not ever pay more, no matter how much you’ve got invested. 
    • Conversely, a minimum fee’s a baseline charge deducted from all accounts: For example, if there is a minimum fee of £50 annually, you’ll pay at least this amount even if your account balance suggests less.

    Both caps and minimums impact your investment costs and, consequently, your returns.

    How Do You Compare SIPP Providers’ Fees?

    To compare SIPP providers’ fees, there’s a number of steps you can follow.

    Consider doing the following when comparing SIPP fees:

    • Identify your needs:Think about your investment goals and how a SIPP may help you achieve them. Different providers may charge differently based on the services they offer.
    • Gather information: Obtain detailed fee information from each provider. This may include setup fees, annual administration fees, trading fees, and any other additional costs.
    • Break down the fees: Look at how the fees are structured and what they cover. Some providers may offer a flat fee, while others may charge based on the value of your investments or have a tiered fee structure.
    • Consider the investment options: Different investment choices may come with different fees. Consider how these align with your investment strategy and the potential total cost.
    • Use comparison tools: Some websites offer tools that allow you to compare SIPP providers, including their fees. Use these tools to make a side-by-side comparison.
    • Look at the total cost: Do not just focus on one aspect of the fees, such as the setup cost. Consider the total cost over time, including transaction costs, to obtain a more accurate picture.
    • Assess value for money: Consider what services are included for the fees charged. The cheapest option may not always offer the best value if it lacks essential features or services.
    • Consult a financial advisor if needed: If the comparison process seems overwhelming or you want personalised advice, a financial advisor with expertise in SIPPs may be able to assist.

    Remember, fees are just one aspect of choosing a SIPP provider. 

    Other factors, such as investment options, customer service, platform ease of use, and the provider’s reputation, should also be part of your decision-making process.

    How Do You Use the SIPP Fee Calculator?

    A SIPP fee calculator estimates potential costs charged by a specific provider. 

    It requires data like investment count, commercial properties, scheme members, benefits, platform fees, and charges in order to calculate an estimated SIPP fee total. 

    However, a SIPP calculator may not include advisor fees, transfer costs, inflation, or future fee changes. 

    Remember

    For an accurate overview, consult an independent pensions advisor registered with the Financial Conduct Authority to navigate SIPPs and align your choice with your investment interests and retirement goals.

    How is the Transparency & Disclosure of Fee’s?

    Transparency and disclosure of SIPP fees is vital, and you should know what your are paying for.

    Keep the following in mind when comparing fees:

    • SIPP providers are regulated by the Financial Conduct Authority (FCA) to ensure fees and charges are clearly laid out. 
    • Your provider should provide clear statements and reports. These documents are your primary tools to navigate the SIPP fee landscape. 
    • Ongoing monitoring of charges helps keep your retirement plan on track. Keeping a keen eye on your charges helps prevent unpleasant surprises.

    Common Questions

    What Are the Common SIPP Fees and Charges?

    How Can I Reduce SIPP Fees and Charges?

    Are There Any Hidden SIPP Fees and Charges?

    What Factors Influence the Amount of SIPP Fees and Charges?

    How Do SIPP Fees and Charges Impact My Retirement Fund?

    What is the Typical Cost of Setting Up a SIPP?

    What Fees Are Involved in Running a SIPP?

    How Much Do Providers Charge for Transferring Assets into a SIPP?

    Do All SIPP Providers Charge the Same Fees?

    What is the Average Cost of Annual Management for a SIPP?

    Are There Any Exit Fees When I Want to Withdraw from My SIPP?

    Can SIPP Fees Affect My Investment Returns?

    Can I Pay My SIPP Fees from Outside My Pension Pot?

    Are SIPP Fees Tax Deductible?

    How Do SIPP Charges Compare With Other Types of Pension?

    How Transparent Are SIPP Fees and Charges?

    How Can I Minimise SIPP Charges?

    Do SIPP Advisors Charge Additional Fees?

    How Do Fees Work When I Start Drawing a Pension from My SIPP?

    In Conclusion

    You may realise that setting up a SIPP can be a relatively simple process as long as you have all the information you need, including a working knowledge of SIPP costs.

    Considering the number and variety of SIPP providers, platforms, and products available, you may need the expert advice of a pensions advisor to help you compare the fees, features, and discounts on offer.

    Now that you know what the typical costs of self-invested personal pensions are, work with your financial advisor to ensure your future SIPP fees and charges are covered no matter how your investments perform.

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