Opening a SIPP: Step-by-step guide

What does it mean to open a SIPP?

When you open a SIPP you’re choosing a type of pension that allows you to choose and manage your own investments for retirement. Unlike workplace pensions where your employer selects the provider and investment options are usually more limited, opening a SIPP puts you in complete control of both provider selection and investment decisions.

What is a SIPP and who can open one?

A SIPP (Self Invested Personal Pension) is a type of personal pension that gives you control over the investment decisions, allowing you to build your retirement portfolio from a wide range of asset classes including individual shares, bonds, investment trusts, ETFs, and even commercial property in some cases.

Eligibility criteria for opening a SIPP:

• UK resident: Most SIPP providers stipulate that you must be a UK resident when you open a SIPP with them. You can usually still manage (and contribute to) that SIPP if you later move overseas.
• Age restrictions: In theory you can open a SIPP at any age, although you'll need a parent or guardian to open one on your behalf if you’re under the age of 18 (known as a ‘junior SIPP’). However, there are more stringent age restrictions when it comes to accessing your SIPP: you normally can't access those funds until you reach age 55 (rising to 57 from April 2028).
• Earnings for tax relief: While you can open a SIPP without any earnings, tax relief on contributions is limited to 100% of your annual earnings or the Annual Allowance (currently £60,000), whichever is lower. If you have no relevant UK earnings, you can still contribute up to £3,600 gross (£2,880 net after 20% tax relief is added) per year.
• Age 75 limit: You can't make tax-free contributions to a SIPP after your 75th birthday. Some providers may still let you contribute if you wish, but you won’t get tax relief on those contributions, and other providers might stop all contributions once you reach this age limit.

Why open a SIPP instead of using a workplace pension?

While workplace pensions offer valuable benefits like mandatory employer contributions and low-cost default investment strategies, there are a few reasons why you might choose to open a SIPP alongside that workplace pension plan.

• Investment flexibility: SIPPs offer thousands of investment options across a wide range of different asset classes, whereas workplace pensions might limit you to between 10 and 50 pre-selected funds. The SIPP’s flexibility allows you to build a portfolio that precisely matches your investment strategy and risk tolerance.
• Control: With a SIPP, you decide when to buy and sell your investments, how to allocate your assets, and how to respond to changing market conditions. This level of control appeals to people who want active involvement in their retirement planning.
• Consolidation: Opening a SIPP allows you to consolidate multiple old workplace pensions and personal pensions into a single pot, making your retirement savings easier to manage and potentially reducing overall fees. Of course, a SIPP isn’t the only type of pension you can use when consolidating older pensions, but it is a popular choice.
• Self-employment: If you're self-employed, you probably won't have access to a workplace pension with employer contributions, making a SIPP or other personal pension your main option for building retirement savings.

The important thing to remember is that if you do have access to a workplace pension with employer contributions, then you should max out those contributions first in order to get the full benefit of employer matching, before contributing additional money to a SIPP.

What do you need before opening a SIPP?

Before you open a SIPP, it's a good idea to get all your documentation together.

What documents and information are required?

SIPP providers need to verify your identity and comply with anti-money laundering regulations, which means you'll need to provide a range of personal information and supporting documents:

Personal information:

• Full name and date of birth
• National Insurance number
• Contact details (address, email, phone number)
• Employment status

Financial information:

• UK bank account details for contributions and withdrawals
• Details of your current income for tax relief purposes
• Information about any existing pensions you might want to transfer

Supporting documents:

• Valid photo ID (passport or driving licence)
• Proof of address (utility bill, bank statement, or council tax bill dated within the last three months

Most SIPP providers now accept electronic document uploads, making the verification process much faster than it used to be when physical documents had to be posted. Some providers also use electronic identity verification services that can confirm your identity instantly using credit reference data.

What about existing pensions?

If you have existing pensions from previous employers or other personal pensions, you might want to transfer them into your new SIPP for easier management and potentially lower overall costs.

Before transferring, you'll need to:

• Find your old pensions: If you've lost track of previous workplace pensions, you can use the government's Pension Tracing Service to locate them. You can also read our guide on how to find your pensions for more information.
• Check for exit penalties: Contact your old pension providers to request transfer values and check whether they charge exit fees or apply market value adjustments that could reduce your pension’s value.
• Look for valuable guarantees: Some older pensions include protected features like guaranteed annuity rates, enhanced tax-free cash above current limits, or final salary benefits that you'd lose by transferring. It’s unlikely to be a good decision to transfer a Defined Benefit (final salary) pension to a SIPP, but even some older DC pensions can offer benefits that you’d lose by transferring.
• Consider transfer timings: Pension transfers often take 4-8 weeks, during which time your funds may be out of the market. If markets are volatile, this timing could affect your transfer value.

What are the main SIPP types and providers?

Not all SIPPs are created equal. There are two main categories of SIPP, each offering different investment options and fee structures:

Choosing between a full SIPP and SIPP Lite: Unless you specifically need to hold commercial property or other specialist investments, a low-cost SIPP (sometimes called a ‘simple SIPP’ or ‘SIPP lite’) will often provide enough investment flexibility for most people while keeping costs lower. Paying for access to specialist investments you'll never use doesn't make financial sense.

How do you open a SIPP?

While the specific process varies slightly between providers, in general the steps to open a SIPP are straightforward and predictable.

Step-by-step process to open a SIPP

1. Research SIPP providers: Compare investment options, fees, platform features, and customer reviews to identify providers that match your needs.
2. Check eligibility and gather documents: Confirm you meet the eligibility criteria and gather together the necessary identification and financial documents.
3. Complete the application: Fill out the provider's online or paper application form with your personal details, employment info, and investment preferences.
4. Verify your identity: Upload or submit ID documents for verification.
5. Fund your SIPP: Make your initial contribution via bank transfer, set up a direct debit for regular contributions, or initiate transfers from existing pensions.
6. Wait for funds to clear: Bank transfers usually clear within 1-5 business days, after which you'll see the funds in your SIPP account (with tax relief automatically added for basic rate taxpayers).
7. Select your investments: Research and choose investments from your provider's platform, building a portfolio aligned with your risk tolerance and retirement timeline.
8. Execute trades: Place buy orders for your chosen investments, which typically execute within 1 business day for shares and funds.
9. Monitor and manage: Regularly review your portfolio's performance, rebalance as needed, and adjust your strategy as you approach retirement.

The entire process from application to making your first investments is likely to take one to two weeks, although pension transfers can extend that to several months.

How to choose a SIPP provider

Choosing the right SIPP provider is crucial because while it is possible to switch providers later, doing so can take time and incur costs.

Consider these key factors when choosing a provider:

• FCA authorisation: First and foremost, you should ensure any provider that you're considering is authorised by the Financial Conduct Authority. You can verify this on the FCA Register. You should never open a SIPP with an unauthorised firm.
• Investment range: Check that the provider offers the specific investments that you want to hold. For instance, if you primarily invest in funds and ETFs, then you might want to avoid paying higher fees for a full SIPP offering commercial property options that you'll never use.
• Fee structure: Compare the total costs including annual platform charges, dealing fees, fund charges, transfer fees, and any additional costs for specialist investments or services. Calculate your likely annual costs based on your expected trading frequency.
• Reviews: It’s a good idea to read the provider’s online review before you open a SIPP with them. When you need help with transfers, withdrawals, or investment queries, responsive support matters.
• Transfer capabilities: If you plan to transfer existing pensions, check the provider's transfer process, timelines, and whether they support in-specie transfers (transferring existing investments without selling them).
• Additional features: Some providers offer features like automatic rebalancing, model portfolios, research tools, or financial planning calculators that might add value depending on your needs.

How to transfer an existing pension into your SIPP

If you've decided to transfer existing pensions into your new SIPP, understanding the transfer process helps you avoid common pitfalls.

Types of pension transfers:

• In-specie transfers: Your existing investments transfer directly to your new SIPP without being sold, keeping you invested throughout the transfer period. This option is only available if your new SIPP provider can hold the same investments as your old pension, and not all providers support in-specie transfers even if they do offer the same investments.
• Cash transfers: With this approach, your old pension sells all your investments, transfers the cash to your new SIPP, and you then reinvest the money. This approach means you're out of the market during the transfer period (potentially 4 to 8 weeks), which could affect your returns if markets move significantly during this time.

Crystallised vs uncrystallised funds:

• Uncrystallised funds: These are pension savings you haven't started accessing yet. Their transfer is straightforward and they maintain their uncrystallised status in your new SIPP.
• Crystallised funds: If you've already started taking benefits from a pension (such as moving funds into drawdown), these crystallised funds can usually still be transferred, but the process is slightly more complex and you'll need to ensure your new SIPP provider accepts crystallised fund transfers.

The transfer process:

1. Request a transfer value from your old pension provider
2. Check for exit penalties or valuable guarantees you'd lose
3. Complete a transfer form with your new SIPP provider
4. Your new provider contacts your old provider to arrange the transfer
5. Your old provider sells investments (unless the transfer is in-specie) and transfers the cash
6. Funds arrive in your new SIPP
7. You reinvest the transferred funds in line with your investment strategy.

Important considerations:

For Defined Benefit pension transfers over £30,000, you're legally required to take advice from an FCA-authorised financial adviser, and in most cases transferring these pensions isn't in your best interests as you'd be giving up guaranteed income for life. The FCA provides guidance on DB pension transfers to help consumers make informed decisions.

HMRC also provides information about pension transfers including tax implications and rules around overseas transfers.

How do contributions work when opening a SIPP?

It’s important to understand how SIPP contributions work, both in the beginning when you first open the SIPP, and on an ongoing basis.

How much can you contribute to a newly opened SIPP?

The amount you can contribute to your new SIPP depends on two main limits:

• Annual Allowance: For most people, this is currently £60,000 for the 2025-26 tax year. This limit applies across all your pensions combined, not just your SIPP, so if you're also contributing to a workplace pension, those contributions count towards the same £60,000 limit. This limit also applies to everyone contributing to your pensions (e.g. your employer), rather than just your own contributions.
• 100% of earnings: Your personal contributions are also limited to 100% of your annual earnings from employment or self-employment. For example, if you earn £35,000 per year, you can contribute up to £35,000 to your pensions even though the Annual Allowance is £60,000.

If you have no earnings you can still contribute up to £3,600 gross (£2,880 net) per year and receive tax relief, making this an option for non-working spouses, carers, or people taking career breaks.

There are also two other considerations that can affect your contributions:

1. The ‘carry forward’ rule
2. The Money Purchase Annual Allowance

The carry forward rule: If you haven't used your full Annual Allowance in the previous three tax years, you can ‘carry forward’ that unused allowance to make larger contributions now. This can be particularly valuable if you receive a bonus, inheritance, or are in a better financial position now than you were a year or two ago.

The Money Purchase Annual Allowance (MPAA): If you've already started taking flexible benefits from another pension (such as drawdown income or UFPLS), your Annual Allowance reduces to just £10,000 for all pension contributions. If this restriction has been triggered then it applies immediately when you open your new SIPP, so it's important to check whether you've triggered the MPAA before making large contributions.

For more detailed information about pension contribution limits and rules, read our guide on pension contributions.

How does tax relief apply when you open a SIPP?

Most SIPPs use 'relief at source', where you contribute after tax and your SIPP provider automatically claims 20% tax relief from HMRC and adds it to your pension.

• For basic rate taxpayers: If you contribute £800, your SIPP provider claims £200 tax relief from HMRC, meaning £1,000 is added to your SIPP. This happens automatically without any action required from you.
• For higher rate taxpayers: You receive the same automatic 20% tax relief, but you need to claim an additional 20% tax relief through self-assessment.
• For additional rate taxpayers: You receive 20% automatically, then claim an additional 25% through self-assessment, giving you total tax relief of 45%.

Tax relief can take 4 to 6 weeks to appear in your SIPP after you make a contribution, although some providers credit it faster.

For more information about how pension tax relief works, see our guide on pension tax and check out HMRC's guidance on tax relief for pension contributions.

Can your employer or limited company contribute to your new SIPP?

Yes, employers can contribute directly to your SIPP, and for company directors this can be particularly tax-efficient.

Employer contributions:

• Don't count towards your 100% of earnings limit (only personal contributions do)
• Do count towards the £60,000 Annual Allowance
• Receive tax relief automatically without you needing to claim it
• Are allowable business expenses, reducing corporation tax
• Don't attract employer or employee National Insurance charges

For company directors, making employer contributions from your limited company to your personal SIPP offers significant tax advantages. The contribution reduces your company's corporation tax bill, avoids National Insurance entirely, and builds your pension wealth efficiently.

However, employer SIPP contributions must be "wholly and exclusively" for business purposes and proportionate to the director's role and remuneration. HMRC scrutinises excessive contributions, particularly in small companies with few employees.

Moreover, from April 2029,  National Insurance relief on salary-sacrifice pension contributions will be capped at £2,000 per year. Contributions above this level made via salary sacrifice will incur both employer and employee National Insurance, although direct employer SIPP contributions made outside salary sacrifice will remain exempt from NI.

For more information about employer pension contributions, see HMRC's guidance on employer contributions.

What can you invest in once your SIPP is open?

One of the main advantages of opening a SIPP is the wide range of investment options available, although the specific investments you can access depend on which provider you've chosen.

Common investment options

Most SIPP providers give you access to thousands of investment options across several asset classes:

• Individual company shares: You can buy shares in companies listed on major stock exchanges like the FTSE 100, FTSE 250, AIM, and often international exchanges like the New York Stock Exchange. This allows you to build a portfolio of specific companies you've researched and believe in.
• Investment funds: You'll likely have access to thousands of funds, including unit trusts, OEICs (Open-Ended Investment Companies), and investment trusts covering different asset classes, sectors, geographic regions, and investment strategies.
• Exchange-Traded Funds (ETFs): These low-cost tracker funds trade on an exchange like shares and offer simple, cheap exposure to entire markets or specific sectors. Popular options include global equity trackers, bond ETFs, and sector-specific funds.
• Bonds: Corporate and government bonds (including UK gilts) provide fixed income and diversification. Your provider might offer individual bonds or bond funds depending on their platform.
• Cash: All SIPPs include cash facilities for holding money awaiting investment, receiving dividends and interest, or maintaining liquidity for planned withdrawals. However, holding too much cash long-term means missing out on investment growth.

The specific investments available depend on your provider. Simple SIPPs usually offer shares, funds, and ETFs, while full SIPPs may include additional options like structured products, unlisted securities, or commercial property.

Can you invest in property through your SIPP?

Some full SIPPs do allow direct commercial property investment, but this option is complex, expensive, and unsuitable for most people.

What's permitted:

• Commercial premises like offices, shops, warehouses, or light industrial units.

What's prohibited:

• Residential property, even if currently used commercially
• Property you or connected parties live in
• Holiday lets or residential buy-to-let properties

Practical considerations:

• Commercial property investments require significant capital
• Costs include surveys, legal fees, stamp duty, and ongoing maintenance
• Property is illiquid, making it difficult to sell quickly if you need access to funds
• Rental income stays within the SIPP and can't be withdrawn until you access your retirement benefits.

For most SIPP holders, achieving property exposure through Real Estate Investment Trusts (REITs) or property funds is going to be much more practical, providing diversification, liquidity, and professional management without the complexity of direct ownership.

How to align investments with your age and risk tolerance

Your investment strategy should reflect your time to retirement, risk tolerance, and financial goals. As a general principle, longer timeframes allow you to use higher-risk, higher-return strategies, while shorter timeframes require more defensive positioning.

In your 30s: High equity exposure, long-term growth focus:

• Can weather market volatility with 18-27 years until minimum retirement age
• This means you could have 80-100% in equities and investment funds
• Focus on growth-oriented funds and global diversification
• Consider some allocation to emerging markets and smaller companies, where returns might be higher.

In your 40s: Balanced growth with emerging risk management:

• Maintain growth focus but introduce stability elements
• Possibly 70-80% in equities and funds, with 20-30% in bonds and defensive assets
• Consider consolidating old pensions for easier management
• Peak earning years often allow increased contributions.

In your 50s: Shift towards preservation and income planning:

• Reduce exposure to volatile individual shares
• Focus on diversified funds and income-generating investments
• Possibly 50-60% in equities and funds, with 40-50% in bonds and defensive assets
• Begin thinking about withdrawal strategy and tax efficiency.

In your 60s: Capital preservation, liquidity for drawdown:

• Prioritise capital preservation over growth
• Possibly 20-30% in equities and funds, with 70-80% in bonds and cash
• Maintain liquidity for planned withdrawals
• Consider annuities for guaranteed income.

These are general guidelines rather than rules. Your optimal allocation depends on your specific circumstances, risk capacity, other income sources, and retirement goals.

What are the costs of opening and running a SIPP?

Costs can vary from one provider to the next, so getting your head around fee structures can help you avoid unexpected charges that could erode your retirement savings over time.

Initial setup and annual fees

• Setup fees: Most UK SIPP providers no longer charge setup fees, although some full SIPPs offering specialist investments might charge £100-£500 for initial setup. Simple SIPPs usually have no setup charges.
• Annual platform charges: These ongoing fees often range from 0.10% to 0.45% of your pension pot annually, although the fees may be billed monthly, quarterly or yearly. Some providers charge a percentage, others charge fixed annual fees (e.g. £100 to £200 a year), and some use a combination with percentage fees capped at a maximum amount.
• Dealing charges: Every time you buy or sell investments, you'll usually pay a dealing fee ranging from £1 to £12 per trade. These costs accumulate quickly if you trade frequently, which is one reason why overtrading can undermine your pension.
• Fund charges: In addition to platform charges, investment funds charge their own ongoing charges figures (OCFs), generally ranging from 0.05% for cheap index trackers to 1.5% or more for actively managed specialist funds. These charges only apply to the portion of your SIPP invested in that fund.

Example of how a SIPP’s costs might add up:

For a £100,000 SIPP with a 0.25% platform charge, holding low-cost index funds averaging 0.15% OCF, making 12 trades per year at £7.50 each:

• Platform charge: £250
• Fund charges: £150
• Dealing charges: £90

Total annual cost: £490 (equivalent to 0.49% of the pension’s value)

Additional charges for property or specialist investments

Full SIPPs offering commercial property or specialist investments often charge additional fees:

• Property holding fees: £200-£500 per year for each property held
• Property transaction fees: £500-£2,000 for property purchases or sales
• Specialist investment fees: Additional charges for holding structured products, unlisted securities, or other complex investments

These costs make specialist investments more expensive to hold, which is why you should only pay for a full SIPP if you genuinely need these investment options.

How to compare providers by cost and service quality

When comparing SIPP providers, calculate your total expected annual costs based on:

1. Your likely pension pot size
2. Your expected trading frequency
3. The types of investments you'll hold
4. Any specialist services you might need.

Beyond costs, consider things like:

• Platform reliability and uptime
• Quality of investment research tools
• Customer service responsiveness
• Mobile app functionality
• Educational resources and support

The cheapest provider isn't always the best value if poor service or limited investment options compromise your ability to manage your SIPP effectively.

What happens after opening your SIPP?

Opening your SIPP is just the beginning. Effective ongoing management ensures your pension stays aligned with your evolving goals and circumstances.

How to monitor and manage your SIPP

• Regular portfolio reviews: Review your SIPP at least quarterly to check performance, ensure your asset allocation remains appropriate, and identify any rebalancing needs. Annual reviews should be more comprehensive, assessing whether or not your overall strategy still matches your retirement timeline and risk capacity.
• Rebalancing: Over time, successful investments can grow to dominate your portfolio while underperformers shrink, skewing your intended asset allocation and making your pension less diversified. Rebalancing means selling portions of outperforming assets and buying underperforming ones to restore your target allocation, maintaining your desired risk level.
• Track contributions and allowances: Keep records of your contributions to ensure you don't exceed the Annual Allowance and trigger tax charges. If you're using carry forward, track your usage carefully.
• Review statements: Your provider will send regular statements (typically quarterly) showing contributions, investment performance, fees charged, and current valuation. Review these for accuracy and to understand how your pension is progressing towards your retirement goals.
• Stay informed: Keep up with pension legislation changes that might affect your SIPP, such as the confirmed inheritance tax changes applying to most unused pension funds and pension death benefits from 6 April 2027, or the minimum pension age increase to 57 in April 2028.

When can you access your SIPP?

You can normally access your SIPP from age 55, although this minimum age is rising to 57 from 6th April 2028. Some people have protected pension ages from older scheme rules that allow earlier access, but these are uncommon and won’t be relevant to your newly opened SIPP.

When you reach the minimum pension age, you can:

• Take up to 25% as tax-free cash (subject to the Lump Sum Allowance of £268,275)
• Move funds into flexi-access drawdown for flexible income
• Take Uncrystallised Funds Pension Lump Sums (UFPLS)
• Purchase an annuity for guaranteed income.

Early access before the minimum pension age is only permitted in exceptional circumstances, such as serious ill health with life expectancy under 12 months.

For comprehensive information about accessing your SIPP, read our guide on pension withdrawals.

What happens if your circumstances change?

Life changes can affect your pension planning, and SIPPs offer flexibility to adapt:

• Career Breaks: You can pause contributions during career breaks, although remember you can still contribute up to £3,600 gross per year (£2,880 net) even with no earnings and still receive tax relief.
• Starting a business: If you become self-employed or start a company, you can continue SIPP contributions and potentially make employer contributions from your business if you operate through a limited company.
• Changing jobs: Your SIPP remains yours regardless of employment changes. You might choose to consolidate your new employer's workplace pension into your SIPP, although you should consider any employer matching you'd lose by doing so.
• Approaching retirement: As retirement nears, review your investment strategy to reduce risk, begin planning your withdrawal approach, and consider whether combining annuities with drawdown might suit your circumstances.
• Financial difficulties: If you're struggling financially, you can reduce or pause your contributions. However, avoid early pension access schemes that claim to unlock your pension before the minimum age, as these are almost always scams resulting in severe HMRC penalties.

For more info on managing contributions through changing circumstances, see our guide to pension contributions.

Frequently asked questions on opening a SIPP

Can I open more than one SIPP?

Yes, you can open multiple SIPPs with different providers, and some people do this to access different investment platforms, spread risk across providers, or separate different investment strategies.

However, managing multiple SIPPs can make things more complex and in some cases more expensive, since some providers offer lower charges for larger pension pots that you might not benefit from if your savings are split across multiple accounts.

How long does it take to open a SIPP?

The length of time it takes to open a SIPP will depend on the provider you choose, but the average timeframe is 1 to 2 weeks from application to making your first investments.

However, if you're transferring existing pensions into your new SIPP, the full process can take 4-8 weeks or occasionally longer if there are complications with the transferring provider.

Can I open a SIPP if I'm self-employed or a company director?

Yes, both self-employed individuals and company directors can open SIPPs.

Self-employed people can contribute based on their taxable profits and receive tax relief up to the Annual Allowance or 100% of earnings.

Company directors can make personal contributions or arrange employer contributions from their limited company, which offers corporation tax relief and National Insurance savings. For directors, employer SIPP contributions can be particularly tax-efficient for extracting profits from the business while building retirement wealth.

What happens if I stop paying into my SIPP?

If you stop making contributions, your SIPP remains open and your investments continue to grow (or fall) based on market performance.

With most providers there’s no requirement to make regular contributions, and you can resume contributions whenever you wish, subject to the Annual Allowance and earnings limits. However, some providers charge higher percentage fees on smaller pots or introduce inactivity fees if you don't trade for extended periods, so check your provider's terms.

Can I open a SIPP for my child or spouse?

You can open a SIPP for a child under 18, with a parent or guardian managing it until they reach adulthood. Anyone can contribute to a child's SIPP up to £2,880 net (£3,600 gross with tax relief) per year, making it a tax-efficient way to build their retirement savings from an early age.

You can't open a SIPP directly "for" your spouse, but they can open their own SIPP and you can contribute up to £2,880 net per year on their behalf if they have no earnings, or they can contribute based on their own earnings if they're working.

Can I transfer my SIPP later to another provider?

Yes, you can transfer your SIPP to another provider if you find a better platform, lower fees, or different investment options.

The process is similar to transferring any pension: you open a new SIPP, request the transfer, and your old provider moves the funds. Check whether your current provider charges exit penalties and whether your new provider supports in-specie transfers if you want to move investments without selling them.

Transfers usually take 4 to 8 weeks.

Do I need a financial adviser to open a SIPP?

You don't need a financial adviser to open a SIPP, and many people successfully manage their SIPPs themselves.

However, financial advice can be valuable if you're uncertain about investment decisions, planning to transfer substantial pension pots, or need help with tax planning or estate planning strategies.

If you lack investment experience or confidence, either seek professional advice or consider whether a workplace pension or standard personal pension with default investment strategies might be more suitable than a self-directed SIPP.