SIPP stands for Self Invested Personal Pension, and is a vehicle used to save for your retirement that allows you to choose your own investments. As people tend to move around more in the employment place than in years gone by, a SIPP provides an excellent vehicle for compounding all the work place pensions you have accumulated into one, low cost provider where you have ultimate control over your money.
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You can currently pay up to £40,000 each year into a SIPP unless you are earning more than £200,000 a year, at which point your annual SIPP allowance is gradually decreased to just £10,000 a year. Choosing the best SIPP for your circumstances is vital, as even tiny differences in charges can amount to vast sums of money over time.
In order to find the best SIPP you will need to decide how often you are likely to be trading your investments. This will directly affect the amount of money you are charged in trading fees. You also want to ensure the platform you are considering has the right investments for your needs, whether you be interested in stocks and shares, EFTs, bonds, or a ready made portfolio.
Most platforms will also charge customers a platform fee, either monthly or annually, which may or may not include a set amount of trades as part of the fee. This platform fee can either be charged as a percentage of your assets, or as a flat fee. If you have a small pension pot, then you may find that a percentage fee will work out more economical for you, however, savers with a large pension will often pay less in platform fees when it is charged as a flat fee. The other charges to be aware of when finding the best platform are the transfer fees when transferring existing pensions to and from the SIPP you have selected.
Our recommended SIPP for large pension pots is Interactive Investor. This is a low cost option with a full suite of plans to suit various investors. It’s low cost option comes in at just £9.99 a month and includes one free share or fund trade. This is one of the few platforms to charge a flat fee and the range of investment options is excellent.
For people with a more modest pension pot, we would recommend Vanguard as a great, low cost option. If you are a seasoned DIY investor, then this may not be the best option as you can only invest in their range of Vanguard funds, however, for novice investors this is ideal and the platform fee is only 0.15% which is about as low cost as you will find anywhere.