Always remember that investments can go down as well as up in value, so you could get back less than you put in. How you’re taxed will depend on your circumstances, and pension and tax rules can change.

What is a Pension?

Updated On:
Apr 17, 2022
An alarm clock
· 3 min read
What is a Pension

We all know that pensions are important. No one needs to tell us that someday when we are too old to work, we will need a steady stream of cash to keep us going. 


For most Koody readers, retirement might seem ridiculously far away. Still, it's important to remember that if you want to live comfortably and enjoy life when you are much older, it pays to start planning now.


This post aims to steer you to relevant parts of the website and help you understand on a high level how pensions work here in the UK.

So, without further ado, here's what we have lined up for you:

What is a Pension?

A pension is a savings pot that you contribute to throughout your working life and spend from when you retire.

The money saved in a pension is usually invested in stocks and shares by your pension provider, and you normally won't be able to access this money until you are at least 55 years old (increases to 57 in 2028).

Types of Pensions

There are two types of pensions - defined benefit and defined contribution pensions. 


For our generation, the relevant pension type is the defined contribution pension. With a defined contribution pension, the onus is on us to build our own pension pots, which will then serve as an income source in retirement. 


Unlike a defined benefit scheme, which promises a specific income at retirement, the amount we might get from a defined contribution pension depends on how much we contribute throughout our lifetime, how our investments perform, and the lifestyle we choose at retirement.

Pension Annual Allowance

You can save as much as you like into your pension each year, but you will be taxed if you:

  1. Contribute more than £40,000 in one year - this is your annual allowance, and you can usually carry forward any unused allowance for up to three years.
  2. Contribute more than 100% of your earnings in one year.
  3. Exceed your lifetime allowance - £1,073,100 in your lifetime.


Tax Relief on Pension Contributions

The government will add money to your pension contributions in the form of tax relief (free money).


For every £80 you put into your pension, the government adds £20 - and you can claim an extra £20 if you're a higher earner.


You can think of tax relief as a refund of the tax you originally paid on your pension contribution at your usual rate of income tax - 20%, 40%, or 45%. 


It's your pension provider who claims this tax relief at the basic rate and adds it to your pension. If you're a higher rate taxpayer, you'll need to claim the additional rebate through your tax return.

How to Contribute to Your Pension

  1. Workplace pension and auto-enrolment
  2. Personal pension
  3. State pension
  4. Lifetime ISA
  5. Pension for the self-employed


1. Workplace pension and auto-enrolment

A workplace pension is a way of saving for your retirement and is usually arranged by your employer. When you join a new company, your employer must enrol you into their workplace pension scheme if you meet the minimum requirement.

Once you are enrolled, both you and your employer must contribute a percentage of your salary into a workplace pension scheme.

The minimum your employer must contribute to your pension is 3% of your salary. And the minimum total contribution (you and your employer) must make is 8%.

See, Workplace Pension Scheme - Auto Enrolment

2. Personal pension

Personal pensions are private pensions that you arrange yourself.

If you don't have a workplace pension, a personal pension could be a great way to save for retirement. And even if you have a workplace pension, a personal pension in addition to your workplace pension could be a great way to grow your retirement savings faster.

There two types of personal pensions - Self-invested Personal Pensions (SIPPs) and stakeholder pensions.

See, Best Pension Providers - Personal Pensions
Also see, Best Stakeholder Pension Providers

3. State pension

In addition to the personal and workplace pensions, you are entitled to something called the State Pension. This is free money from the government, and the amount you get is based entirely on your National Insurance record.

The earliest you can get the State Pension is when you reach the State Pension age. If you're currently aged between 20 and 39, your State Pension age will likely be 68. You can double-check that number here.

4. Lifetime ISA

Another way to save into a pension is with a Lifetime ISA. A Lifetime ISA is open to adults aged 39 or younger and lets you save up to £4,000 a year towards your first home or retirement. The government will add a 25% bonus to your savings every year up to a maximum of £1,000 per year.

5. Pension for the self-employed

If you are self-employed, a solo-founder, or the sole director of a company with no other employees, you will not be automatically enrolled into a pension when you start working for yourself. 

It is up to you to sort out your pensions. This shouldn't scare you. It's pretty easy to open a pension pot, and saving into one is just as simple as transferring money from one account to another.

See, Self-employed Pension - Best Pension for Self-employed People

Credits 


Best Stakeholder Pension Providers

Compare some of the best stakeholder pension providers below:

You usually can't access the money in your pension pot until you are at least 55 years old (increases to 57 in 2028) when you can take 25% as a tax-free lump sum.

Capital at risk. Other charges may apply.

Aviva - Ready-made stakeholder pension; Offers financial advice

Aviva's Logo
Product
Stakeholder Pension
Account Type
Ready-made
Minimum Contribution
£20 per month
Annual Fund Management Cost
Capped at 1%

The Aviva Stakeholder Pension allows you to invest your money in a range of funds that offer you access to various assets such as stocks, shares and property. And you can choose from a range of high to low risk funds, depending on your attitude to risk. With Aviva, you can start your Stakeholder Pension with as little as £20 a month, and pay money into your pension plan either regularly, e.g. every month, or make one-off payments. You can also change that amount or stop and start payments when you need to. When you reach the retirement age of 55 (57 from 2028), you will have a number of options about how you can use your pension savings, including taking an income, lump sum or a combination of both of these. The Aviva Stakeholder pension also lets you create a pension pot for your children or grandchildren. You can deposit up to £2,880 for each child per year.

With Aviva, you pay only an annual fund charge, which is capped at 1%. And you will not have to pay any charges for setting up your investment or for switching money between funds. Aviva offers financial advice at a separate fee.

Please note: When you pay into a pension, your capital is at risk.

GO TO SITE

Standard Life - DIY and ready-made stakeholder pension

Standard Life
Product
Stakeholder Pension
Account Type
DIY & Ready-made
Minimum Contribution
£16
Annual Fund Management Cost
Capped at 1%

The Standard Life Stakeholder Pension allows you to invest your money in 30+ funds and 2 Lifestyle Profiles. You can invest in up to 12 funds at any one time, but if you decide to pick a Lifestyle Profile, you can only combine this with a with-profits fund. The Lifestyle Profiles are ready-made investment portfolios that invest your money in funds and move them as you get closer to retirement, to try and get you the best possible returns for your goals. If you do not want to choose a fund, Standard Life will automatically invest your money in a Lifestyle Profile depending on goals and risk preferences.

Standard Life charges an annual management charge of 1% of the value of the funds you are invested in each year.

Please note: When you pay into a pension, your capital is at risk.

GO TO SITE

Best Private Pension Providers UK

Compare some of the best private pension providers in the UK below.

You usually can't access the money in your pension pot until you are at least 55 years old (increases to 57 in 2028) when you can take 25% as a tax-free lump sum.

Capital at risk. Other charges apply.


Interactive Investor - One free trade every month; Lots of research

Interactive Investor
Product
SIPP
Account Type
DIY & Ready-made
Minimum Contribution
£0
Annual Platform Fee
 £156 (£12.99 per month)

Interactive Investor is the UK's number one flat-fee investment platform with more than 40,000 investments to choose from, including UK and overseas shares, funds, investment trusts and ETFs. The Interactive Investor Pension allows you to build a pension in one of two ways depending on your investing savviness: Beginner investors or those who prefer to choose a ready-made investment portfolio can build their pension pot using Quick-start Funds, which is an easy way to start investing where you choose from six low-cost funds prepared by the team of experts at Interactive Investor. Advanced or more confident investors can choose from a wide range of funds and shares and build their pension portfolios themselves. With Interactive Investor, You can combine your other pensions into one SIPP for simpler retirement planning. You also get a free trade every month, which you can use to buy or sell any investment. When you reach the retirement age of 55 (57 from 2028), Interactive Investor will provide a range of options for taking an income from your pension, and there is no extra charge for this.

Interactive Investor charges a flat fee of £12.99 per month, so you know exactly how much you will be paying each month. The higher your pension pot, the lower this fee becomes on a percentage basis. Interactive Investor has other products, including a Stocks and Shares ISA, Trading Account, and Junior ISA.

Special offer: Open a SIPP and pay no monthly fee for 6 months. Terms apply.

Please note: When you pay into a pension, your capital is at risk.

GO TO SITE

Hargreaves Lansdown - Lots of investment options, research and tips

Hargreaves Lansdown
Product
SIPP
Account Type
DIY & Ready-made
Minimum Contribution
£100 lump sum or £25 per month
Annual Platform Fee
0.45% - 0% (Funds)
0.45% (Shares - max £200/year)

Hargreaves Lansdown is a FTSE 100 company and the biggest investment platform in the UK. Hargreaves Lansdown allows you to build a SIPP portfolio from over 2,500 funds, UK and overseas shares, investment trusts and more. With Hargreaves Lansdown, you can build your pension portfolio in one of two ways depending on your investing savviness: Beginner investors or those who prefer to choose a ready-made investment portfolio can build their pension pot by choosing from a range of ready-made options where the team of experts at Hargreaves Lansdown will take care of the day-to-day investment decisions for you. Advanced or more confident investors can choose from a wide range of funds, shares and other investments and build their pension portfolios themselves.

The Hargreaves Lansdown SIPP is free to set up and low cost to run. There is a yearly charge for holding investments, but it is never more than 0.45%. Some of the investments on offer have their own annual charges, so please check these before investing. It is also free to buy and sell funds. Other dealing charges depend on the type of investment and how often you trade. If you need a financial adviser to help you choose investments, Hargreaves Lansdown offers a financial advice service at a fee. Hargreaves Lansdown also offers a Stocks and Shares ISA, Lifetime ISA, Junior ISA and Fund and Share Account.

Please note: The Hargreaves Lansdown SIPP is intended for investors happy at making their own investment decisions. When you pay into a pension, your capital is at risk. The charges quoted here are not exhaustive - other charges apply.

GO TO SITE

AJ Bell Youinvest - Lots of investment options, ideas and research

AJ Bell Youinvest
Product
SIPP
Account Type
DIY & Ready-made
Minimum Contribution
£1,000 lump-sum. No minimum for a regular payment
Annual Platform Fee
0.25% - 0% (Funds)
0.25% (Shares - max £10/month)

AJ Bell Youinvest is one of the UK’s largest online investment platforms, and it is on a mission to make investing as easy as possible for you. AJ Bell Youinvest was the first investment company in the UK to offer an online SIPP. Investors can select from thousands of investments, including UK and overseas shares, funds, investment trusts and ETFs. With AJ Bell Youinvest, you can build your pension portfolio in one of two ways depending on your investing savviness: Beginner investors or those who prefer to choose a ready-made investment portfolio can get a little, or a lot, of help from AJ Bell Youinvest’s specialists by selecting one of the investment ideas on offer. Advanced or more confident investors can choose from thousands of investments and build their pension portfolios themselves. The AJ Bell Youinvest SIPP is suitable for both the self-employed and those looking to open a personal pension to complement their workplace pension. AJ Bell Youinvest also lets you combine your existing pensions in a SIPP, so you can see and control everything in one place. This helps you understand how your pension is performing and exactly what you're paying in charges.

It’s free to open an AJ Bell Youinvest SIPP, and you can buy investments from as little as £1.50. There is a yearly charge for holding investments, but it is never more than 0.25%. AJ Bell Youinvest also offers a Stocks and Shares ISA, Lifetime ISA, Junior ISA and Dealing Account. AJ Bell Youinvest does not offer advice.

Please note: When you pay into a pension, your capital is at risk. Pension rules also apply.

GO TO SITE

Bestinvest - Lots of investment options and ideas; Beginner-friendly

Product
SIPP
Account Type
DIY & Ready-made
Minimum Contribution
£0
Annual Platform Fee
0.4% - 0% (DIY)
0.2% - 0% (Ready-made)

Bestinvest is a UK investment platform offering about 2,500 funds, UK shares, investment trusts and ETFs. With Bestinvest, you can build your pension pot in one of two ways depending on your investing savviness: Beginner investors or those who prefer to choose a ready-made investment portfolio can build their pension pot by selecting one of Bestinvest’s ready-made investments. These investments are fully diversified and created and managed by the team at Bestinvest. Once you’ve picked one, you don’t need to do anything else. Advanced or more confident investors can choose from a wide range of funds, shares, ETFs and ITs and build their investment pension portfolio themselves. Bestinvest also has an investment search tool that makes it easy to browse and filter all of the investments, and you can use their free guides and articles if you need any inspiration. They are quite popular for their Spot the Dog guide which shows a list of poorly performing funds you probably want to avoid.

There are no set-up fees or fund dealing charges with the Bestinvest SIPP. Additionally, Bestinvest will pay up to £500 towards your exit fees when you transfer your pensions to them (terms apply). Bestinvest allows you to invest via a Stocks and Shares ISA, General Investment Account and SIPP.

Please note: When you pay into a pension, your capital is at risk.

GO TO SITE

Penfold - SIPP & Workplace Pensions; Ethical investments available

Penfold Pensions Logo
Product
SIPP
Account Type
Ready-made
Minimum Contribution
£0
Annual Platform Fee
0.88% - 0.75%
(0.4% or 0.53% on pots over £100k)

Penfold is a modern pension provider offering customers a quick and easy way to build and contribute to their pension pots. The platform is digital-first and built for everyone regardless of whether you are employed, self-employed or running your own business. With Penfold, you can open a private pension, self-employed pension or be auto-enrolled via your workplace. Once you sign up, you can choose from four plans: Lifetime, Standard, Sustainable and Sharia, depending on your goals and values. Set up only takes 5 minutes, and you can adjust your contributions at any time. Penfold can also track and transfer your old pensions - even if you do not know the details, so you can combine all your pensions from previous employments in one place. If you are ever confused about anything relating to your pension or retirement, they have a team of experts happy to provide jargon-free answers to your questions.

There is no minimum deposit when you set up your pension with Penfold, and you can pay nothing each month if you like. If you do make a contribution, the minimum amount Penfold can process is £10. Penfold charges an annual fee between 0.75% and 0.88%, depending on the plan you choose. If your pension pot size is larger than £100,000 the fee is reduced to either 0.4% or 0.53%, depending on the plan you choose, on the portion of your savings over this amount.

Please note: When you pay into a pension, your capital is at risk.

GO TO SITE

Moneyfarm - Offers financial advice and ethical investments

Moneyfarm Logo
Product
SIPP
Account Type
Ready-made
Minimum Contribution
£500
Annual Platform Fee
0.75% - 0.35%

Moneyfarm is a UK robo advisor that provides you with a personalised investment plan based on your risk preferences. Investors can choose from seven globally diversified risk-rated portfolios, including ethical investments. The team at Moneyfarm actively manages your investments, but each investment portfolio is made up of exchange-traded funds (ETFs) and other passive trackers. Customers also benefit from free and personalised digital financial advice from Moneyfarm's investment consultants, and you can chat, phone, email, or meet your consultant in person. If you tell Moneyfarm when you aim to retire, the team will manage your portfolio around your target retirement date - reducing your risk as the date approaches. It is easy to transfer your existing pensions to Moneyfarm. Just fill in your details in-app or online. Moneyfarm will then talk to your existing provider and move your pensions over to your Moneyfarm account. The process typically takes about 3 - 4 weeks and is as paperless as possible, depending on your provider. When you reach the retirement age of 55 (57 from 2028), Moneyfarm will provide a range of flexible options for taking an income from your pension. This is called a pension drawdown, and there is no extra charge for it.

Moneyfarm charges a yearly account management fee starting at 0.75% and reducing to 0.35% depending on the size of your portfolio. The annual average investment fund fee is 0.2%, and the annual effect of market spread comes to about 0.09%. Moneyfarm has other products, including a Stocks and Shares ISA and General Investment Account.

Please note: When you pay into a pension, your capital is at risk.

GO TO SITE

Vanguard - Offers financial planning and educational resources

Vanguard Investor'
Product
SIPP
Account Type
DIY & Ready-made
Minimum Contribution
£500 lump sum or £100 per month
Annual Platform Fee
0.15% (max £375/year)

Vanguard is a popular low-cost investment platform with over 75 own-brand funds, including ETFs, active funds and index funds. Vanguard does not offer stocks and shares, but there are various ETFs on offer for those interested in exchange-traded securities. The Vanguard SIPP allows you to build a pension in one of two ways depending on your investing savviness: Beginner investors or those who prefer to choose a ready-made investment portfolio can build their pension pot by selecting one of the Target Retirement funds, which give you access to thousands of bonds and shares in a single investment. Advanced or more confident investors can choose from over 75 individual Vanguard funds and build their pension portfolios themselves. It is pretty straightforward to transfer your existing pensions to Vanguard, and it is completely free to do so - although your existing provider might charge you a fee, so do check with them first.

To open a Vanguard SIPP, you need to have at least £100 per month or a lump sum of £500. There is a yearly management fee of 0.15% (capped at £375) per year. Some of the funds on offer have separate charges, so please check these before investing. Vanguard has other products, including a Stocks and Shares ISA, Junior ISA, General Account and Personal Financial Planning.

Please note: When you pay into a pension, your capital is at risk.

GO TO SITE

Aviva - Ready-made stakeholder pension; Offers financial advice

Aviva's Logo
Product
Stakeholder Pension
Account Type
Ready-made
Minimum Contribution
£20 per month
Annual Fund Management Cost
Capped at 1%

The Aviva Stakeholder Pension allows you to invest your money in a range of funds that offer you access to various assets such as stocks, shares and property. And you can choose from a range of high to low risk funds, depending on your attitude to risk. With Aviva, you can start your Stakeholder Pension with as little as £20 a month, and pay money into your pension plan either regularly, e.g. every month, or make one-off payments. You can also change that amount or stop and start payments when you need to. When you reach the retirement age of 55 (57 from 2028), you will have a number of options about how you can use your pension savings, including taking an income, lump sum or a combination of both of these. The Aviva Stakeholder pension also lets you create a pension pot for your children or grandchildren. You can deposit up to £2,880 for each child per year.

With Aviva, you pay only an annual fund charge, which is capped at 1%. And you will not have to pay any charges for setting up your investment or for switching money between funds. Aviva offers financial advice at a separate fee.

Please note: When you pay into a pension, your capital is at risk.

GO TO SITE

Standard Life - DIY and ready-made stakeholder pension

Standard Life
Product
Stakeholder Pension
Account Type
DIY & Ready-made
Minimum Contribution
£16
Annual Fund Management Cost
Capped at 1%

The Standard Life Stakeholder Pension allows you to invest your money in 30+ funds and 2 Lifestyle Profiles. You can invest in up to 12 funds at any one time, but if you decide to pick a Lifestyle Profile, you can only combine this with a with-profits fund. The Lifestyle Profiles are ready-made investment portfolios that invest your money in funds and move them as you get closer to retirement, to try and get you the best possible returns for your goals. If you do not want to choose a fund, Standard Life will automatically invest your money in a Lifestyle Profile depending on goals and risk preferences.

Standard Life charges an annual management charge of 1% of the value of the funds you are invested in each year.

Please note: When you pay into a pension, your capital is at risk.

GO TO SITE

Best Pension Providers for Self-employed People

Compare some of the best pension providers for self-employed people below:

You usually can't access the money in your pension pot until you are at least 55 years old (increases to 57 in 2028) when you can take 25% as a tax-free lump sum.

Capital at risk. Other charges apply.

AJ Bell Youinvest - Lots of investment options, ideas and research

AJ Bell Youinvest
Product
SIPP
Account Type
DIY & Ready-made
Minimum Contribution
£1,000 lump-sum. No minimum for a regular payment
Annual Platform Fee
0.25% - 0% (Funds)
0.25% (Shares - max £10/month)

AJ Bell Youinvest is one of the UK’s largest online investment platforms, and it is on a mission to make investing as easy as possible for you. AJ Bell Youinvest was the first investment company in the UK to offer an online SIPP. Investors can select from thousands of investments, including UK and overseas shares, funds, investment trusts and ETFs. With AJ Bell Youinvest, you can build your pension portfolio in one of two ways depending on your investing savviness: Beginner investors or those who prefer to choose a ready-made investment portfolio can get a little, or a lot, of help from AJ Bell Youinvest’s specialists by selecting one of the investment ideas on offer. Advanced or more confident investors can choose from thousands of investments and build their pension portfolios themselves. The AJ Bell Youinvest SIPP is suitable for both the self-employed and those looking to open a personal pension to complement their workplace pension. AJ Bell Youinvest also lets you combine your existing pensions in a SIPP, so you can see and control everything in one place. This helps you understand how your pension is performing and exactly what you're paying in charges.

It’s free to open an AJ Bell Youinvest SIPP, and you can buy investments from as little as £1.50. There is a yearly charge for holding investments, but it is never more than 0.25%. AJ Bell Youinvest also offers a Stocks and Shares ISA, Lifetime ISA, Junior ISA and Dealing Account. AJ Bell Youinvest does not offer advice.

Please note: When you pay into a pension, your capital is at risk. Pension rules also apply.

GO TO SITE

Hargreaves Lansdown - Lots of investment options, research and tips

Hargreaves Lansdown
Product
SIPP
Account Type
DIY & Ready-made
Minimum Contribution
£100 lump sum or £25 per month
Annual Platform Fee
0.45% - 0% (Funds)
0.45% (Shares - max £200/year)

Hargreaves Lansdown is a FTSE 100 company and the biggest investment platform in the UK. Hargreaves Lansdown allows you to build a SIPP portfolio from over 2,500 funds, UK and overseas shares, investment trusts and more. With Hargreaves Lansdown, you can build your pension portfolio in one of two ways depending on your investing savviness: Beginner investors or those who prefer to choose a ready-made investment portfolio can build their pension pot by choosing from a range of ready-made options where the team of experts at Hargreaves Lansdown will take care of the day-to-day investment decisions for you. Advanced or more confident investors can choose from a wide range of funds, shares and other investments and build their pension portfolios themselves.

The Hargreaves Lansdown SIPP is free to set up and low cost to run. There is a yearly charge for holding investments, but it is never more than 0.45%. Some of the investments on offer have their own annual charges, so please check these before investing. It is also free to buy and sell funds. Other dealing charges depend on the type of investment and how often you trade. If you need a financial adviser to help you choose investments, Hargreaves Lansdown offers a financial advice service at a fee. Hargreaves Lansdown also offers a Stocks and Shares ISA, Lifetime ISA, Junior ISA and Fund and Share Account.

Please note: The Hargreaves Lansdown SIPP is intended for investors happy at making their own investment decisions. When you pay into a pension, your capital is at risk. The charges quoted here are not exhaustive - other charges apply.

GO TO SITE

Bestinvest - Lots of investment options and ideas; Beginner-friendly

Product
SIPP
Account Type
DIY & Ready-made
Minimum Contribution
£0
Annual Platform Fee
0.4% - 0% (DIY)
0.2% - 0% (Ready-made)

Bestinvest is a UK investment platform offering about 2,500 funds, UK shares, investment trusts and ETFs. With Bestinvest, you can build your pension pot in one of two ways depending on your investing savviness: Beginner investors or those who prefer to choose a ready-made investment portfolio can build their pension pot by selecting one of Bestinvest’s ready-made investments. These investments are fully diversified and created and managed by the team at Bestinvest. Once you’ve picked one, you don’t need to do anything else. Advanced or more confident investors can choose from a wide range of funds, shares, ETFs and ITs and build their investment pension portfolio themselves. Bestinvest also has an investment search tool that makes it easy to browse and filter all of the investments, and you can use their free guides and articles if you need any inspiration. They are quite popular for their Spot the Dog guide which shows a list of poorly performing funds you probably want to avoid.

There are no set-up fees or fund dealing charges with the Bestinvest SIPP. Additionally, Bestinvest will pay up to £500 towards your exit fees when you transfer your pensions to them (terms apply). Bestinvest allows you to invest via a Stocks and Shares ISA, General Investment Account and SIPP.

Please note: When you pay into a pension, your capital is at risk.

GO TO SITE

Interactive Investor - One free trade every month; Lots of research

Interactive Investor
Product
SIPP
Account Type
DIY & Ready-made
Minimum Contribution
£0
Annual Platform Fee
 £156 (£12.99 per month)

Interactive Investor is the UK's number one flat-fee investment platform with more than 40,000 investments to choose from, including UK and overseas shares, funds, investment trusts and ETFs. The Interactive Investor Pension allows you to build a pension in one of two ways depending on your investing savviness: Beginner investors or those who prefer to choose a ready-made investment portfolio can build their pension pot using Quick-start Funds, which is an easy way to start investing where you choose from six low-cost funds prepared by the team of experts at Interactive Investor. Advanced or more confident investors can choose from a wide range of funds and shares and build their pension portfolios themselves. With Interactive Investor, You can combine your other pensions into one SIPP for simpler retirement planning. You also get a free trade every month, which you can use to buy or sell any investment. When you reach the retirement age of 55 (57 from 2028), Interactive Investor will provide a range of options for taking an income from your pension, and there is no extra charge for this.

Interactive Investor charges a flat fee of £12.99 per month, so you know exactly how much you will be paying each month. The higher your pension pot, the lower this fee becomes on a percentage basis. Interactive Investor has other products, including a Stocks and Shares ISA, Trading Account, and Junior ISA.

Special offer: Open a SIPP and pay no monthly fee for 6 months. Terms apply.

Please note: When you pay into a pension, your capital is at risk.

GO TO SITE

Moneyfarm - Offers financial advice and ethical investments

Moneyfarm Logo
Product
SIPP
Account Type
Ready-made
Minimum Contribution
£500
Annual Platform Fee
0.75% - 0.35%

Moneyfarm is a UK robo advisor that provides you with a personalised investment plan based on your risk preferences. Investors can choose from seven globally diversified risk-rated portfolios, including ethical investments. The team at Moneyfarm actively manages your investments, but each investment portfolio is made up of exchange-traded funds (ETFs) and other passive trackers. Customers also benefit from free and personalised digital financial advice from Moneyfarm's investment consultants, and you can chat, phone, email, or meet your consultant in person. If you tell Moneyfarm when you aim to retire, the team will manage your portfolio around your target retirement date - reducing your risk as the date approaches. It is easy to transfer your existing pensions to Moneyfarm. Just fill in your details in-app or online. Moneyfarm will then talk to your existing provider and move your pensions over to your Moneyfarm account. The process typically takes about 3 - 4 weeks and is as paperless as possible, depending on your provider. When you reach the retirement age of 55 (57 from 2028), Moneyfarm will provide a range of flexible options for taking an income from your pension. This is called a pension drawdown, and there is no extra charge for it.

Moneyfarm charges a yearly account management fee starting at 0.75% and reducing to 0.35% depending on the size of your portfolio. The annual average investment fund fee is 0.2%, and the annual effect of market spread comes to about 0.09%. Moneyfarm has other products, including a Stocks and Shares ISA and General Investment Account.

Please note: When you pay into a pension, your capital is at risk.

GO TO SITE

Penfold - SIPP & Workplace Pensions; Ethical investments available

Penfold Pensions Logo
Product
SIPP
Account Type
Ready-made
Minimum Contribution
£0
Annual Platform Fee
0.88% - 0.75%
(0.4% or 0.53% on pots over £100k)

Penfold is a modern pension provider offering customers a quick and easy way to build and contribute to their pension pots. The platform is digital-first and built for everyone regardless of whether you are employed, self-employed or running your own business. With Penfold, you can open a private pension, self-employed pension or be auto-enrolled via your workplace. Once you sign up, you can choose from four plans: Lifetime, Standard, Sustainable and Sharia, depending on your goals and values. Set up only takes 5 minutes, and you can adjust your contributions at any time. Penfold can also track and transfer your old pensions - even if you do not know the details, so you can combine all your pensions from previous employments in one place. If you are ever confused about anything relating to your pension or retirement, they have a team of experts happy to provide jargon-free answers to your questions.

There is no minimum deposit when you set up your pension with Penfold, and you can pay nothing each month if you like. If you do make a contribution, the minimum amount Penfold can process is £10. Penfold charges an annual fee between 0.75% and 0.88%, depending on the plan you choose. If your pension pot size is larger than £100,000 the fee is reduced to either 0.4% or 0.53%, depending on the plan you choose, on the portion of your savings over this amount.

Please note: When you pay into a pension, your capital is at risk.

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Vanguard - Offers financial planning and educational resources

Vanguard Investor'
Product
SIPP
Account Type
DIY & Ready-made
Minimum Contribution
£500 lump sum or £100 per month
Annual Platform Fee
0.15% (max £375/year)

Vanguard is a popular low-cost investment platform with over 75 own-brand funds, including ETFs, active funds and index funds. Vanguard does not offer stocks and shares, but there are various ETFs on offer for those interested in exchange-traded securities. The Vanguard SIPP allows you to build a pension in one of two ways depending on your investing savviness: Beginner investors or those who prefer to choose a ready-made investment portfolio can build their pension pot by selecting one of the Target Retirement funds, which give you access to thousands of bonds and shares in a single investment. Advanced or more confident investors can choose from over 75 individual Vanguard funds and build their pension portfolios themselves. It is pretty straightforward to transfer your existing pensions to Vanguard, and it is completely free to do so - although your existing provider might charge you a fee, so do check with them first.

To open a Vanguard SIPP, you need to have at least £100 per month or a lump sum of £500. There is a yearly management fee of 0.15% (capped at £375) per year. Some of the funds on offer have separate charges, so please check these before investing. Vanguard has other products, including a Stocks and Shares ISA, Junior ISA, General Account and Personal Financial Planning.

Please note: When you pay into a pension, your capital is at risk.

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Aviva - Ready-made stakeholder pension; Offers financial advice

Aviva's Logo
Product
Stakeholder Pension
Account Type
Ready-made
Minimum Contribution
£20 per month
Annual Fund Management Cost
Capped at 1%

The Aviva Stakeholder Pension allows you to invest your money in a range of funds that offer you access to various assets such as stocks, shares and property. And you can choose from a range of high to low risk funds, depending on your attitude to risk. With Aviva, you can start your Stakeholder Pension with as little as £20 a month, and pay money into your pension plan either regularly, e.g. every month, or make one-off payments. You can also change that amount or stop and start payments when you need to. When you reach the retirement age of 55 (57 from 2028), you will have a number of options about how you can use your pension savings, including taking an income, lump sum or a combination of both of these. The Aviva Stakeholder pension also lets you create a pension pot for your children or grandchildren. You can deposit up to £2,880 for each child per year.

With Aviva, you pay only an annual fund charge, which is capped at 1%. And you will not have to pay any charges for setting up your investment or for switching money between funds. Aviva offers financial advice at a separate fee.

Please note: When you pay into a pension, your capital is at risk.

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Standard Life - DIY and ready-made stakeholder pension

Standard Life
Product
Stakeholder Pension
Account Type
DIY & Ready-made
Minimum Contribution
£16
Annual Fund Management Cost
Capped at 1%

The Standard Life Stakeholder Pension allows you to invest your money in 30+ funds and 2 Lifestyle Profiles. You can invest in up to 12 funds at any one time, but if you decide to pick a Lifestyle Profile, you can only combine this with a with-profits fund. The Lifestyle Profiles are ready-made investment portfolios that invest your money in funds and move them as you get closer to retirement, to try and get you the best possible returns for your goals. If you do not want to choose a fund, Standard Life will automatically invest your money in a Lifestyle Profile depending on goals and risk preferences.

Standard Life charges an annual management charge of 1% of the value of the funds you are invested in each year.

Please note: When you pay into a pension, your capital is at risk.

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Best SIPP Providers

Compare some of the best SIPP providers in the UK below.

You usually can't access the money in your pension pot until you are at least 55 years old (increases to 57 in 2028), when you can take 25% as a tax-free lump sum.


Capital at risk. Other charges apply.

Interactive Investor - One free trade every month; Lots of research

Interactive Investor
Product
SIPP
Account Type
DIY & Ready-made
Minimum Contribution
£0
Annual Platform Fee
 £156 (£12.99 per month)

Interactive Investor is the UK's number one flat-fee investment platform with more than 40,000 investments to choose from, including UK and overseas shares, funds, investment trusts and ETFs. The Interactive Investor Pension allows you to build a pension in one of two ways depending on your investing savviness: Beginner investors or those who prefer to choose a ready-made investment portfolio can build their pension pot using Quick-start Funds, which is an easy way to start investing where you choose from six low-cost funds prepared by the team of experts at Interactive Investor. Advanced or more confident investors can choose from a wide range of funds and shares and build their pension portfolios themselves. With Interactive Investor, You can combine your other pensions into one SIPP for simpler retirement planning. You also get a free trade every month, which you can use to buy or sell any investment. When you reach the retirement age of 55 (57 from 2028), Interactive Investor will provide a range of options for taking an income from your pension, and there is no extra charge for this.

Interactive Investor charges a flat fee of £12.99 per month, so you know exactly how much you will be paying each month. The higher your pension pot, the lower this fee becomes on a percentage basis. Interactive Investor has other products, including a Stocks and Shares ISA, Trading Account, and Junior ISA.

Special offer: Open a SIPP and pay no monthly fee for 6 months. Terms apply.

Please note: When you pay into a pension, your capital is at risk.

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AJ Bell Youinvest - Lots of investment options, ideas and research

AJ Bell Youinvest
Product
SIPP
Account Type
DIY & Ready-made
Minimum Contribution
£1,000 lump-sum. No minimum for a regular payment
Annual Platform Fee
0.25% - 0% (Funds)
0.25% (Shares - max £10/month)

AJ Bell Youinvest is one of the UK’s largest online investment platforms, and it is on a mission to make investing as easy as possible for you. AJ Bell Youinvest was the first investment company in the UK to offer an online SIPP. Investors can select from thousands of investments, including UK and overseas shares, funds, investment trusts and ETFs. With AJ Bell Youinvest, you can build your pension portfolio in one of two ways depending on your investing savviness: Beginner investors or those who prefer to choose a ready-made investment portfolio can get a little, or a lot, of help from AJ Bell Youinvest’s specialists by selecting one of the investment ideas on offer. Advanced or more confident investors can choose from thousands of investments and build their pension portfolios themselves. The AJ Bell Youinvest SIPP is suitable for both the self-employed and those looking to open a personal pension to complement their workplace pension. AJ Bell Youinvest also lets you combine your existing pensions in a SIPP, so you can see and control everything in one place. This helps you understand how your pension is performing and exactly what you're paying in charges.

It’s free to open an AJ Bell Youinvest SIPP, and you can buy investments from as little as £1.50. There is a yearly charge for holding investments, but it is never more than 0.25%. AJ Bell Youinvest also offers a Stocks and Shares ISA, Lifetime ISA, Junior ISA and Dealing Account. AJ Bell Youinvest does not offer advice.

Please note: When you pay into a pension, your capital is at risk. Pension rules also apply.

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Hargreaves Lansdown - Lots of investment options, research and tips

Hargreaves Lansdown
Product
SIPP
Account Type
DIY & Ready-made
Minimum Contribution
£100 lump sum or £25 per month
Annual Platform Fee
0.45% - 0% (Funds)
0.45% (Shares - max £200/year)

Hargreaves Lansdown is a FTSE 100 company and the biggest investment platform in the UK. Hargreaves Lansdown allows you to build a SIPP portfolio from over 2,500 funds, UK and overseas shares, investment trusts and more. With Hargreaves Lansdown, you can build your pension portfolio in one of two ways depending on your investing savviness: Beginner investors or those who prefer to choose a ready-made investment portfolio can build their pension pot by choosing from a range of ready-made options where the team of experts at Hargreaves Lansdown will take care of the day-to-day investment decisions for you. Advanced or more confident investors can choose from a wide range of funds, shares and other investments and build their pension portfolios themselves.

The Hargreaves Lansdown SIPP is free to set up and low cost to run. There is a yearly charge for holding investments, but it is never more than 0.45%. Some of the investments on offer have their own annual charges, so please check these before investing. It is also free to buy and sell funds. Other dealing charges depend on the type of investment and how often you trade. If you need a financial adviser to help you choose investments, Hargreaves Lansdown offers a financial advice service at a fee. Hargreaves Lansdown also offers a Stocks and Shares ISA, Lifetime ISA, Junior ISA and Fund and Share Account.

Please note: The Hargreaves Lansdown SIPP is intended for investors happy at making their own investment decisions. When you pay into a pension, your capital is at risk. The charges quoted here are not exhaustive - other charges apply.

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Penfold - SIPP & Workplace Pensions; Ethical investments available

Penfold Pensions Logo
Product
SIPP
Account Type
Ready-made
Minimum Contribution
£0
Annual Platform Fee
0.88% - 0.75%
(0.4% or 0.53% on pots over £100k)

Penfold is a modern pension provider offering customers a quick and easy way to build and contribute to their pension pots. The platform is digital-first and built for everyone regardless of whether you are employed, self-employed or running your own business. With Penfold, you can open a private pension, self-employed pension or be auto-enrolled via your workplace. Once you sign up, you can choose from four plans: Lifetime, Standard, Sustainable and Sharia, depending on your goals and values. Set up only takes 5 minutes, and you can adjust your contributions at any time. Penfold can also track and transfer your old pensions - even if you do not know the details, so you can combine all your pensions from previous employments in one place. If you are ever confused about anything relating to your pension or retirement, they have a team of experts happy to provide jargon-free answers to your questions.

There is no minimum deposit when you set up your pension with Penfold, and you can pay nothing each month if you like. If you do make a contribution, the minimum amount Penfold can process is £10. Penfold charges an annual fee between 0.75% and 0.88%, depending on the plan you choose. If your pension pot size is larger than £100,000 the fee is reduced to either 0.4% or 0.53%, depending on the plan you choose, on the portion of your savings over this amount.

Please note: When you pay into a pension, your capital is at risk.

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Moneyfarm - Offers financial advice and ethical investments

Moneyfarm Logo
Product
SIPP
Account Type
Ready-made
Minimum Contribution
£500
Annual Platform Fee
0.75% - 0.35%

Moneyfarm is a UK robo advisor that provides you with a personalised investment plan based on your risk preferences. Investors can choose from seven globally diversified risk-rated portfolios, including ethical investments. The team at Moneyfarm actively manages your investments, but each investment portfolio is made up of exchange-traded funds (ETFs) and other passive trackers. Customers also benefit from free and personalised digital financial advice from Moneyfarm's investment consultants, and you can chat, phone, email, or meet your consultant in person. If you tell Moneyfarm when you aim to retire, the team will manage your portfolio around your target retirement date - reducing your risk as the date approaches. It is easy to transfer your existing pensions to Moneyfarm. Just fill in your details in-app or online. Moneyfarm will then talk to your existing provider and move your pensions over to your Moneyfarm account. The process typically takes about 3 - 4 weeks and is as paperless as possible, depending on your provider. When you reach the retirement age of 55 (57 from 2028), Moneyfarm will provide a range of flexible options for taking an income from your pension. This is called a pension drawdown, and there is no extra charge for it.

Moneyfarm charges a yearly account management fee starting at 0.75% and reducing to 0.35% depending on the size of your portfolio. The annual average investment fund fee is 0.2%, and the annual effect of market spread comes to about 0.09%. Moneyfarm has other products, including a Stocks and Shares ISA and General Investment Account.

Please note: When you pay into a pension, your capital is at risk.

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Vanguard - Offers financial planning and educational resources

Vanguard Investor'
Product
SIPP
Account Type
DIY & Ready-made
Minimum Contribution
£500 lump sum or £100 per month
Annual Platform Fee
0.15% (max £375/year)

Vanguard is a popular low-cost investment platform with over 75 own-brand funds, including ETFs, active funds and index funds. Vanguard does not offer stocks and shares, but there are various ETFs on offer for those interested in exchange-traded securities. The Vanguard SIPP allows you to build a pension in one of two ways depending on your investing savviness: Beginner investors or those who prefer to choose a ready-made investment portfolio can build their pension pot by selecting one of the Target Retirement funds, which give you access to thousands of bonds and shares in a single investment. Advanced or more confident investors can choose from over 75 individual Vanguard funds and build their pension portfolios themselves. It is pretty straightforward to transfer your existing pensions to Vanguard, and it is completely free to do so - although your existing provider might charge you a fee, so do check with them first.

To open a Vanguard SIPP, you need to have at least £100 per month or a lump sum of £500. There is a yearly management fee of 0.15% (capped at £375) per year. Some of the funds on offer have separate charges, so please check these before investing. Vanguard has other products, including a Stocks and Shares ISA, Junior ISA, General Account and Personal Financial Planning.

Please note: When you pay into a pension, your capital is at risk.

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