Quick answer: A SIPP lets you choose individual shares, ETFs and any fund — full control, fees from 0.15%. A personal pension restricts you to a curated fund list chosen by the provider — simpler, but often pricier. Both get identical tax relief. Choose a SIPP if you want low-cost index investing or wide choice; a personal pension if you want a hands-off default fund.
The core difference
Both are defined contribution pensions with the same tax relief and access age (55, rising to 57 in 2028). The difference is what you can hold: a SIPP opens the whole UK investment universe; a personal pension gives you 20–100 funds picked by the provider.
| SIPP | Personal pension | |
|---|---|---|
| Investment choice | Thousands | Curated list |
| Typical fees | 0.15–0.45% + fund OCF | 0.30–1.0% all-in |
| Setup effort | You build the portfolio | Pick a default and forget |
| Best for | DIY / advised investors | Hands-off savers |
When a SIPP is better
- You want low-cost index investing (Vanguard SIPP 0.15%)
- You want individual shares, ETFs or investment trusts
- You're consolidating multiple old pots onto one platform
- Your pot is over £100k and £-capped SIPP fees beat %-based personal pensions
When a personal pension is better
- You don't want to make investment decisions
- Your pot is small and SIPP minimum fees would bite
- You value a branded provider's service desk and a lifestyle default fund
Cost comparison (£100,000 pot)
| Type | Example | Annual cost |
|---|---|---|
| SIPP | Vanguard LifeStrategy | ~£370 |
| SIPP | AJ Bell multi-asset | ~£500 |
| Personal pension | Older Aviva policy | £800–£1,200 |
Over 25 years, the gap between £370 and £900 a year on a £100k pot is roughly £30,000 in your final pot. That's why SIPP fees usually win.
Should you switch from a personal pension to a SIPP?
Often yes — if your personal pension charges over 0.75% all-in, has limited fund choice, and no exit penalty or guarantees. Don't switch if you'd lose a guaranteed annuity rate, with-profits guarantee, or protected pension age. Read our transfer decision guide first.
Frequently asked questions
A SIPP (Self-Invested Personal Pension) lets you choose individual stocks, bonds, ETFs, and funds. A standard personal pension restricts you to a curated list of funds chosen by the provider. Both get the same tax relief; the difference is investment freedom.
Not always. Modern low-cost SIPPs like Vanguard (0.15%) and AJ Bell (0.25% capped) can be cheaper than older personal pensions. Older PPs sometimes have hidden charges of 1%+. Always check the AMC plus any platform fees.
Yes. Many people have a workplace personal pension plus a SIPP for additional contributions or consolidation. Your annual allowance (£60k in 2026/27) applies across all pensions combined.
Often yes — if your personal pension has limited fund choice or charges over 0.50% with no exit penalties. Don't transfer if you'd lose guaranteed annuity rates, with-profits guarantees, or pay big exit penalties.
Yes — your investments are held in trust, separate from the SIPP provider's company assets. If the SIPP provider fails, your investments are protected. The FSCS covers up to £85,000 if a fund manager fails or platform is mis-sold.