Best DIY pensions revealed: could you save thousands by switching Sipp provider?

Which? has unveiled four Recommended Providers for self-invested personal pensions (Sipps): Vanguard, Fidelity, Halifax Share Dealing and Interactive Investor.

Sipps have grown in popularity since the pension freedoms of 2015. Sales rose by 21% between 2020 and 2022, from 740,000 to 895,000.

To help you choose the best providers, Which? compared the fees they charge and surveyed around 1,900 existing Sipp customers about the level of service they're getting. 

Here we explain how a Sipp can give you more control over your retirement savings, and how to choose the right one for you.

The appeal of Sipps

As the name suggests, Sipps are personal pensions that can sit alongside, or incorporate, any workplace pensions you already have. 

They are a type of defined contribution (DC) pension, which means that the final value of your pot at retirement depends on how much you have contributed and how the underlying investments have performed. 

Sipps enjoy the same tax benefits as other personal pensions. But their big selling point is that they give you more control over how and where your money is invested. There are now a wide variety of products to choose from, ranging from ‘full’ advised Sipps through ready-made portfolio providers to ‘DIY’ Sipps. 

Which?’s latest analysis focuses on these low-cost DIY Sipps, offered by investment platforms. In general, DIY Sipps give you access to a wide range of assets and investment options, but in some instances, you can only invest in funds, not individual shares.

Standout Sipp providers

Companies qualify to be a Which? Recommended Provider (WRP) for Sipps if they combine a high customer score (70% or more) with competitive fees across our seven portfolio scenarios (these range from £50,000 up to £1m). 

Vanguard achieved the highest customer score of 78% and has been named a WRP for a fourth consecutive year. Its low fees are a major selling point (0.15%, capped at £375 a year), though your investment options are limited to a range of its own tracker funds.

Vanguard is joined by Fidelity (75%), a WRP for the third year in a row, Halifax Share Dealing (72%) and Interactive Investor (71%).

Interactive Investor's flat fee of £12.99 a month makes it the cheapest option for most pot sizes. Halifax also has a low fixed charge of £45 per quarter if the Sipp is worth more than £50,000. 

How Sipps can save you money

Charges for an advised personal pension or a workplace scheme will invariably be higher compared with a DIY Sipp, although in return for this you'll get support from your adviser or board of trustees managing and investing your money. 

But costs can vary significantly depending on which Sipp provider you choose. A saver with a Sipp worth £268,000 (the average value among Sipp customers we surveyed) would end up with £358,378 in their pot after 10 years if they opt for the cheapest provider (Interactive Investor), assuming annual investment growth of 3%.

With the most expensive Sipp provider (Hargreaves Lansdown), their pot would be worth £345,498 – almost £13,000 less. Over 15 years, the difference would be £21,700 - and that's all down to fees.

• Find out more: Sipp charges compared

What to consider before taking the DIY route

Sipps are best suited to savers who have the time and knowledge to pick and monitor their own investments.

If the thought of taking responsibility for the growth of your retirement fund makes you nervous, a DIY Sipp is unlikely to be the right option for you – unless you’re happy to pay an independent financial adviser to assist you. 

According to recent research by adviser review site VouchedFor, the average cost of an adviser combining three pensions worth a total of £500,000 and providing an investment strategy is £8,881, or 1.8%, in initial fees. If you take the DIY route, putting the same £500,000 into a Sipp with Vanguard would incur a platform charge of just £375 (plus fund fees).

While typically more expensive than DIY options, ‘do-it-for-me’ Sipps, which offer ready-made portfolios catering for different risk appetites, are worth considering if you’d like more support with investment decisions but are concerned about the price of financial advice.