With nearly three-quarters (74%) of UK defined contribution pension savers feeling they’re not on track for a reasonable standard of living in retirement¹, exploring different SIPP types could be a vital step toward long-term financial security.

Self-Invested Personal Pensions (SIPPs) offer flexibility for a range of investor profiles—from cautious savers to those with ethical or high-growth goals—empowering individuals to tailor their retirement strategy.

At EveryInvestor, we break down the key differences in SIPP types to help you make clear, actionable insights, simplifying your pension planning journey.

Keep reading to find out which SIPP could work best for you...

What’s a SIPP?

A Self-Invested Personal Pension (SIPP) is a type of UK pension plan that gives you greater control over how your retirement savings are invested.

It offers tax advantages and flexibility, allowing you to choose from a wide range of investments such as shares, funds, and property.

SIPPs typically come in 2 forms: full SIPPs, which offer extensive investment options, and low-cost SIPPs, which are simpler and more affordable for everyday investors.

What Are the 6 Type of SIPPs?

In the UK, there are several types of Self-Invested Personal Pensions (SIPPs) to choose from, each with varying levels of control and flexibility; these include full SIPPs, hybrid SIPPs, and robo-advisery SIPPs.

The 6 types of SIPPs are full, low-cost, bank, hybrid, platform, and robo-advisery SIPPs.

Here's more on each type:

#1. Full SIPP 

Full SIPPs offer the widest investment flexibility, allowing you to choose from a broad range of investments such as stocks, bonds, commercial property, and even private equity.

#2. Low-Cost SIPPs 

Low-cost SIPPs tend to offer a smaller investment range, which simplifies management and lowers the cost.

#3. Bank SIPPS

Bank SIPPs are offered by banks or banking subsidiaries, typically providing a more limited range of investment options (funds, savings accounts, and possibly shares) compared to full SIPPs.

Bank SIPPs may appeal to more cautious investors seeking simplicity, lower fees, and brand familiarity.

#4. Hybrid SIPPs

Hybrid SIPPs strike a balance, mandating that you allocate a portion of your funds into the provider's insured pension offerings while granting you the freedom to invest the remainder as you see fit. 

In return for your commitment to their insured funds, you’ll benefit from lower fees.

#5. Platform SIPPs 

Platform SIPPs provide an intuitive online platform that enables you to take active control of your investments, giving you as an investor broad access to funds, shares, ETFs, and bonds in one place.

These SIPPs typically offer a user-friendly interface, transparent fees, and control over investment choices, making them popular with DIY investors.

#6. Robo-Advisery SIPPs

Robo-Advisery SIPPs combine cutting-edge technology with automated portfolio management, offering digital pensions managed through automated investment platforms that use algorithms to create and maintain a portfolio tailored to your goals and risk tolerance.

These SIPPs are ideal for investors who prefer low-cost, hands-off investing.

What Are Specialised SIPPs?

Specialised SIPPs are designed for experienced investors who want to hold a wider range of non-standard assets, such as commercial property, unlisted shares, or ethically responsible SIPPs.

They offer greater flexibility and control but usually come with higher fees, more complex administration, and stricter regulatory requirements.

Take a look at these options:

Group SIPPs

Group SIPPs are generally workplace pensions offered by employers to their employees.

They provide a convenient way for a group of individuals to save for retirement together.

Ethical/Socially Responsible SIPPs

Ethical/Socially Responsible SIPPs empower you to invest with integrity, targeting funds that prioritize sustainability and ethical practices or those dedicated to generating positive social impact.

Full SIPP Benefits, Risks & Suitability Explained

These are at the top end of the Self-Invested Person Pension market, offering a full suite of features and benefits for the discerning investor.

They offer maximum flexibility and more diverse investment options, but with the potential for higher returns comes equally higher risks.

This makes them ideal for experienced investors who want hands-on control over their pension funds. 

Low-Cost SIPP Benefits, Risks & Suitability

These plans offer an economical alternative to traditional self-invested personal pensions, providing the essentials at a more accessible price point.

Offering a gateway to hands-on retirement planning with the dual perks of affordability and ease, they are ideal for those starting out or preferring a no-frills pension approach.

While they empower investors with smaller portfolios to manage their funds independently, the reduced costs may limit investment choices and access to bespoke advice. 

Such SIPPs suit the cost-conscious, self-reliant investor ready to navigate their retirement savings without extensive financial advice.

What Are The Hybrid SIPP Benefits, Risks & Suitability?

Hybrid SIPPs offer the best of both worlds: the security of a standard personal pension and the adaptable investment freedom of a SIPP.

The self-invested segment provides more control and potential for greater returns based on selected investments. 

The trade-off includes limited investment options and the complexity of managing two investment types. 

These are best suited for intermediate investors who want a mix of secure, provider-managed funds and the freedom to tailor part of their portfolio, offering a middle path between passive and active pension management.

Platform SIPP Benefits, Risks & Suitability

These are digital investment services that offer investors a user-friendly online platform to manage a variety of pension investments in one centralised location.

They provide a streamlined investment experience with the benefit of consolidating various pension assets on a single online platform, offering ease of access and portfolio management. 

The intuitive interfaces and real-time control appeal to investors who value transparency and self-management. 

However

Risks include potential platform fees and the reliance on your own investment acumen, as well as the security risks inherent to digital platforms. 

Such SIPPs are most suitable for the tech-savvy investor who is confident in making informed decisions and prefers the convenience of managing investments digitally.

What Are The Robo-Advisery SIPP Benefits, Risks & Suitability?

Robo-Advisery SIPPs are automated, technology-driven pension plans that use algorithms to manage your investments based on your risk preferences and financial goals.

They offer the benefit of hands-off investment management, using advanced algorithms to optimise your pension portfolio based on a personalised risk profile. 

This automated approach provides a low-cost, accessible entry into investing for beginners or those with limited time to manage their pensions. 

However

The main risks lie in the lack of human oversight, which may not fully account for nuanced market conditions or personal circumstances. 

Consequently, these SIPPs are best suited for individuals comfortable with entrusting their investment strategies to technology, particularly those seeking a passive investment experience with minimal involvement.

Group SIPPs Benefits, Risks & Suitability

Group SIPPs are designed for multiple members, typically employees, to pool their resources.

The collective advantage of pooled resources, allows members to enjoy reduced management costs and potentially better investment terms through economies of scale. 

They benefit from a unified management structure, simplifying the administrative burden for organisations. 

However

The risks involved mirror individual SIPPs, including market fluctuation and investment choice limitations within the group framework. 

These plans are particularly suitable for companies or collectives looking to provide a structured, yet flexible, pension option to employees, combining the appeal of individual control with the strength of group bargaining.

What Are The Ethical/Socially Responsible SIPP Benefits, Risks & Suitability?

Ethical/Socially Responsible SIPPs focus on companies practising responsible business, prioritising sustainability, and promoting social welfare.

These SIPPs cater to investors looking to align their retirement savings with their values, focusing on sustainable and socially conscious investments. 

The benefits include fostering positive change through investment choices and potentially tapping into the robust performance of ethical sectors. 

However

These SIPPs may face risks such as limited diversification due to the exclusion of certain industries and the evolving definition of what constitutes an 'ethical' investment. 

They are especially suitable for investors who prioritise ethical considerations as much as financial returns and are committed to supporting environmental, social, and governance (ESG) principles through their pension strategy.

How To Choose the Right SIPP?

Selecting the ideal SIPP requires careful consideration of your financial goals, investment preferences, and appetite for risk to ensure alignment with your long-term retirement strategy.

Factors to Consider

When selecting the right SIPP, you should evaluate a variety of factors to ensure it fits your retirement plan.

Factors to consider include:

• Investment options
• Fees 
• Flexibility
• Access to financial advice
• Platform functionality
• Your own investment knowledge and experience
• Customer service

By carefully examining these factors, you can make an informed decision that aligns with your financial goals and personal investment style.

Understanding Fees & Charges

SIPPs come with various fees and charges, which can significantly affect returns, so it’s vital to understand these costs upfront.⁵

Look out for: 

• Annual management fees
• Set-up fees
• Trading charges
• Transfer fees
• Withdrawal charges
• Penalty charges
• Inactivity fees

Understanding each of these fees and how they apply to your investment will help you choose a plan that offers a cost structure that aligns with your investment strategy and activity level.

Role of Financial Advisers

Financial advisors are key in navigating the SIPP landscape as they offer customised retirement strategies, assist with SIPP selection, and manage your portfolio to keep it aligned with your goals. 

Their expertise in investment, tax efficiency, and regulatory changes ensures your retirement planning is both optimised and compliant, providing you with the comfort of professional oversight.

Learn More: SIPP Pension Advisors

How Are SIPPs Regulated?

SIPPs are governed by strict financial services legislation and overseen by various regulatory bodies. 

Current Legislation & Governance

These plans are not only governed by strict financial services legislation but also by the overarching framework of the Pension Schemes Act 2015.⁶ 

This legislation, together with regulatory body oversight, fortifies the governance structure for SIPPs, ensuring adherence to precise operational and compliance standards.

Potential Regulatory Changes

The landscape of SIPP regulation is subject to change as financial markets evolve. 

This includes adjustments in response to economic shifts, emerging investment products, or to close any regulatory gaps.

A noteworthy shift is the increase in the normal minimum pension age from 55 to 57, slated for implementation in 2028.⁷

Prospective adjustments signify an evolving regulatory environment aiming to adapt to changing economic and demographic landscapes.

Role of the Financial Conduct Authority (FCA)

The FCA's⁸ role is multifaceted, focusing on the oversight of marketing standards, the qualification and conduct of financial advisors, and the regular monitoring of SIPP providers through mandatory reporting. 

It ensures that SIPP management aligns with consumer interests, offering a layer of protection through the FSCS⁹ and maintaining a stable pension environment.

Future of SIPPs in the UK

Looking forward, SIPPs in the UK face both exciting opportunities and challenges. 

Market trends may influence their direction, technological advancements will drive their growth, and legislative changes will form their framework.

Market Trends & Predictions

The digitisation trend is expected to surge, with Robo-Advisery and Platform SIPPs becoming increasingly popular.¹⁰ 

More investors are likely to seek SIPPs that match their ethical and social values, with ethical and socially responsible SIPPs set to continue growing in popularity.¹¹

The demand for personalised pension plans and flexible investments is also predicted to rise.¹²

Impact of Brexit & Global Factors

Global factors significantly shape SIPPs in the UK, with economic volatility, currency fluctuations, and international regulatory trends influencing investment outcomes. 

Geopolitical events and health crises, exemplified by the COVID-19 pandemic, highlight the need for proactive risk management in SIPPs with global exposure.¹³

Environmental, Social, and Governance (ESG) considerations are also becoming critical in investment decisions as the market trends towards sustainability. 

These diverse global elements collectively impact the stability, regulation, and future orientation of SIPPs.

Common Questions

In Conclusion

The pension landscape is evolving swiftly, propelled by market trends, technological innovations, and regulatory changes. 

Choosing the ideal plan hinges on a clear understanding of your financial objectives, risk appetite, and investment acumen.

As you venture through this dynamic territory, stay informed about FCA regulations and watch for shifts that shape the future of these pension plans. 

Explore the types of SIPPs available on the market to craft a retirement plan that aligns seamlessly with your financial aspirations.