Should I transfer my SIPP?

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Fact checked.
May 19, 2024

In a nutshell

Whether you’ve got a personal pension, SIPP or an old workplace pension, you should most likely transfer it to a top provider. You’ll potentially save a lot of fees over time, and your money could grow much faster.

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Already have a self-invested personal pension (SIPP), not happy with your existing provider and looking to transfer it? Or, just considering all your options? Let’s run through if you should transfer your SIPP or keep it where it is.

First of all, let’s just make sure we’re all on the same page when talking about a SIPP…

What is a SIPP?

A SIPP is a self-invested personal pension, it’s a personal pension where you decide where and how your money is invested.

What is a SIPP?

That was simple right? Not so fast. We’ll cover the details in more detail, but let’s run through a personal pension first to work out which type of pension you have.

Wait, what’s a personal pension?

Pensions can be confusing and there’s lots of different names for them, however a personal pension is a pension that you manage, and it’s all in your name. You can set one up at any time, even through an app on your phone, and carry out a pension transfer to a new pension provider at any time.

There’s also a workplace pension, which you’ll have if you’re employed. Your employer sets this up for you and decides who the pension provider is.

Workplace and personal pensions

By law your employer will add a minimum of 3% of your salary each year, if you add 5%. And sometimes they can be kind and add more!

Workplace pension

Note: both a personal pension and a workplace pension are types of private pensions – which simply means it’s in your name (private to you), and you decide when to take it out (as long as your over 55).

Also, if you leave your company, you can transfer your workplace pension to a personal pension with a provider of your choice, we like PensionBee, but of course it's up to you!

A public pension is the government pension, called the State Pension, and this is what you’ll get when you reach 66 (67 from 2028), if you’ve paid enough National Insurance contributions.

Confusing isn’t it? We hope that’s cleared it up a bit.

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The different types of personal pension

Now with a personal pension, they can either simply be a ‘personal pension’, or they can be a ‘self-invested personal pension’.

A standard personal pension is where experts manage your investments for you, and take care of everything. They grow your pension over time ready for when you retire. It's the most common option.

Personal pension

A self-invested personal pension (SIPP) is where you personally manage your investments, and you decide which investments to buy and sell, and when. Ultimately, it’s all your responsibility.

Self-invested personal pension (SIPP)

But here’s where it gets slightly confusing again. With a SIPP, experts can also manage your investments too. These are the more modern versions of SIPPs, and you’ll only have a few simple options to choose from, such as if you want to invest ethically (no fossil fuel companies etc.), or use a standard pension plan, after that, the experts take care of everything.

These types of pensions are highly recommended. You get the benefit of where your money goes, but also the benefit of the experts investing for you. It’s a win-win. And they often come with very low fees.

A great example of this is PensionBee¹ and Moneyfarm¹ – you’ll choose from a few pension plan options (such as socially responsible), and after that, it’s all over to their experts. Both highly recommended.

Benefits of a personal pension

If you weren't already aware, saving into a personal pension is one of the best ways to save for your future and retirement. 

It’s unlikely that the State Pension (the government pension) and even a workplace pension (set up by your employer) is going to be enough for a comfortable retirement. And that’s where personal pensions come in. You get some great perks when saving within them, such as…

Government bonus

The government incentivises people to save into a pension so that people won't need to rely on them when they are older. For this reason pensions are supposed to be completely tax-free (technically called 100% tax-relief).

For instance when you pay into a workplace pension, the money is taken out of your salary before you pay tax.

Workplace pension tax relief

With a personal pension, you get a bonus added to your pension automatically from the government every time you contribute to your personal pension.

It’s a massive 25% bonus every time you pay in. Yep, we’re not joking! This is to refund the tax you’ve paid on your income as you've already paid tax from your salary.

Personal pension tax relief

Well, that’s the basic rate tax (earning up to £50,270), and if you’re a higher rate taxpayer (40%) or additional rate taxpayer (45%), earning over £50,270 and £125,140, you can get tax back at those rates too (you’ll claim this on your Self Assessment tax return).

No Inheritance Tax

It gets better, there's also no Inheritance Tax with all pensions. That’s a tax your loved ones might have to pay after you pass away, if the total of all of your assets (such as property and savings) total over £325,000. And they’ll have to pay 40% on anything above that. Ouch!

What's inheritance tax?

With a pension, it goes straight to whoever you name as your beneficiary (normally a spouse or civil partner). It’s not included in your estate. And if you pass away under the age of 75, they won’t have to pay any Income Tax either. They might do if you pass away over 75.

Consolidate your pensions

You can also move all of your pensions into one, called consolidating your pension. This makes them much easier to manage and track performance.

Why transfer your old pensions

Plus, you can potentially benefit from lower fees too – often a pension provider will reduce fees when you have more saved with them (as a % of the total saved).

Pension consolidation

And more importantly, you won’t forget about them all. If you’ve had lots of jobs over the years, you might have lots of different pensions all over the place, and they can easily get lost.

Should you transfer your SIPP?

Anyway, back to business. Should you transfer your SIPP?

Presuming we are talking about an actual SIPP and not a general personal pension or a workplace pension, then it all depends on which investments you want to make, and the cost of your provider. We’ll cover this in a moment.

Transferring a personal pension or workplace pension

If you do have a regular personal pension or an old workplace pension, we recommend moving them to one of the top providers. You’ll potentially benefit from much lower fees (which can have a big impact on your savings over time), and the potential for much higher growth (how much your savings grow in time). Plus, you’ll be able to decide which pension plan you want your pension invested in (such as no fossil fuels).

If you’re not sure who the top pension providers are, we’ve reviewed them and put together the best personal pensions. Spoiler: the top is PensionBee¹ – rated 5 star, they’re easy to use, low cost, have a great track record of investing, and will handle the whole pension transfer process for you – you don’t need to do a thing! Here’s our PensionBee review to learn more.

Transferring your SIPP

If you manage your own investments within a SIPP, you might want to consider transferring to a lower cost provider (if you’re not already using one) – that’s the only real difference between providers. Well, that, and the range of investment options.

We’ve reviewed the best self-invested personal pensions in terms of overall cost, and investment options, and here they are:

The best self-invested personal pensions

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Best overall
AJ Bell rated 5 stars

AJ Bell

AJ Bell is well established, with a good reputation.

It's one of the cheapest SIPPs out there (charging a low annual fee).

There's a huge range of investment options – pretty much every investment out there (including both funds and shares).

The customer service is excellent too.

Overall, it's one of the best options for a SIPP.

Learn more

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Interactive Investor rated 5 stars

Interactive Investor

Interactive Investor is a well established company, and very popular.

Instead of paying a percentage of the investments in your account (like other investment companies), you’ll instead pay a fixed fee per month – and it’s pretty low, starting at just £5.99 per month for a pension (SIPP).

This makes it one of the cheapest SIPP providers out there, especially if you have a fairly sizeable amount within your pension (e.g. over £30,000).

On top of that, there’s huge range of investment options (e.g. shares and funds) – one of the largest.

It's easy to use, and the website and app are great. The customer service is excellent too.

A great choice overall.

Learn more

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Are you using the best provider?

Your money could grow much faster with a top pension provider.

Best personal pensionsBest personal pensions

You can also transfer it to a standard personal pension if you like too, if you’d rather have the experts manage things from now on.

Do I need to speak to a financial advisor first?

You don’t have to speak to a financial advisor first before transferring a pension – unless you are transferring a ‘defined benefit pension scheme’ with a pension value over £30,000. 

A defined benefit pension is one you’ll get if you work for the government, or places like the NHS – where your pension is determined by how long you’ve worked there and your salary. It pays a set income every year when you retire (such as a final salary pension).

Defined benefit pension

If you want to transfer a defined benefit pension pot, you’ll need financial advice first (legally). But only if it’s worth over £30,000 (for these pensions, it’s called the ‘transfer value’).

Most people have a ‘defined contribution pension scheme’ which is built up from contributions from your salary and from your employer if you have one.

Defined contribution pension

You can transfer defined contribution pensions whenever you like without getting advice, but you can still get financial advice if you like. A good pension provider will often handle the pension transfer process too (and handle as many pension transfers as you like).

What happens when you retire

With a SIPP and any personal pension, it’s up to you what you want to do with it, and you can start withdrawing it from age 55 (57 from 2028). Although we recommend keeping it invested so it can grow even bigger until you fully retire.

Personal pension retirement age

Lots of people use their pension pot to buy an annuity which provides a guaranteed income every month for the rest of their life, or for a set number of years (for instance 20 years). Or, you could keep it invested either within the existing pension fund or a new pension fund (that is maybe intended to provide a regular income) and just take an income every month or when you need it.

You’ll get the first 25% completely tax free, and you can take this as a tax free lump sum, or instead whenever you take money out, 25% of the money you withdraw will be tax free, it's completely up to you.

Accessing your tax-free money from your pension

On the remaining 75% you might have to pay Income Tax. It will depend on how much money you have earned at the time, as you’ll still get your Personal Allowance, which is earning £12,570 each year before you have to pay tax.

Let’s recap

And that’s it for transferring your SIPP. You can transfer it if you want to, any time you like.

If you have a SIPP that’s really a general personal pension or an old workplace pension – where you aren’t managing the investments yourself, we recommend moving it to one of the top pension providers such as PensionBee¹ or Moneyfarm¹. 

They’re both low cost and have a great track record of investing – and are super easy to use and manage. You could also check out our full range of best personal pensions.

However, if you manage your own investments within a SIPP, it’s all about finding a low cost provider who has the investments you want. We recommend checking out AJ Bell¹ – they’re low cost and have a huge range of investment options, you likely won’t find anywhere better. We’ve also got the full range of best self-invested personal pensions

And before you go, well done for saving within a personal pension – they’re a real game changer for improving your retirement. Keep up the saving!

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Are you using the best provider?

Your money could grow much faster with a top pension provider.

Best personal pensionsBest personal pensions
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Are you using the best provider?

Your money could grow much faster with a top pension provider.

Best personal pensionsBest personal pensions
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This article was written, reviewed and fact checked by the expert team at Nuts About Money. You’re in safe hands. Learn more.

Are you using the best provider?

Your money could grow much faster with a top pension provider.

Best personal pensionsBest personal pensions

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