What are the charges on a SIPP compared with the alternatives?
A SIPP's cost is four things added together: the platform fee, the fund charges inside it, dealing costs, and whatever the provider charges to pay you an income. The fourth is the one nobody compares when opening an account, and it is the one that applies for the whole of retirement.
- Platform: a percentage of assets or a flat fee, sometimes capped.
- Funds: the ongoing charges figure of whatever you hold, on top of the platform fee.
- Dealing: per trade, and per regular investment on some platforms.
- Drawdown: set-up and ongoing income payment charges, which vary enormously.
01 The four layers
The platform charge covers holding and administering the SIPP, levied either as a percentage of assets or as a flat annual fee. The fund charges are separate and belong to whatever you hold inside it — an index tracker and an actively managed fund can differ by a full percentage point.
Dealing charges apply per trade on many platforms, sometimes with a cheaper rate for regular monthly investing. For a buy-and-hold investor these are small; for anyone rebalancing frequently they are not.
The total is what matters, and it is the number to compare. A low headline platform fee with an expensive fund range can cost more than a dearer platform with cheap index funds.
Source: FCA consumer information
02 The drawdown charge
Paying an income out of a SIPP is a separate service and many providers charge for it — a set-up fee for entering drawdown, and an annual or per-payment fee thereafter. Some charge nothing; some charge a few hundred pounds a year.
Over a thirty-year retirement that difference is substantial, and it applies at the point when moving provider is most disruptive. Choosing a platform on accumulation costs alone is choosing on the cheaper half of the relationship.
Ask specifically what it costs to enter drawdown, to take a regular monthly income, and to make an ad hoc withdrawal. Those three numbers are the ones that will apply for longer than anything else.
Shows: the total annual cost of a SIPP including a drawdown fee, and what the drawdown fee alone costs across a retirement. Ignores: dealing charges, adviser fees, and any cap on the platform charge.
On the defaults above, the worked example shows £1,550 a year. The drawdown fee alone is £6,000 across 30 years, and it is the charge least often compared when the account is opened.
03 Full SIPPs and simple ones
A simple SIPP holding funds and shares on a mainstream platform is a low-cost product. A full SIPP that can hold commercial property, unquoted shares or an insurance policy costs considerably more, because the administration is genuinely harder.
Most people need the first and are sold the second only when a specific asset requires it. Paying full SIPP charges to hold three index funds is a common and avoidable cost.
The same applies to advised versus self-directed arrangements. An adviser charge on top of platform and fund charges is a third layer, and it should be judged against what the advice actually delivers rather than bundled into a single percentage nobody separates.
Source: Workplace pensions
People choose a SIPP on the accumulation charges and then live with the drawdown charges for thirty years. Ask three questions before opening one: what does it cost to enter drawdown, to take a monthly income, and to make an ad hoc withdrawal. Some providers charge nothing and some charge a few hundred a year, and the difference over a retirement is thousands — payable at exactly the point when moving provider is most disruptive. And do not pay full SIPP charges to hold index funds; that product exists for commercial property, not for a portfolio.
FAQ
What makes up a SIPP's cost?
Four things: the platform charge, the fund charges inside it, dealing costs, and whatever the provider charges to pay you an income in drawdown. The total is what matters and the fourth is the one least often compared.
Why does the drawdown fee matter so much?
Because it applies for the whole of retirement, at the point when switching provider is most disruptive. A few hundred pounds a year across thirty years is thousands, and it is invisible when the account is opened.
Do I need a full SIPP?
Only if you intend to hold assets a mainstream platform cannot — commercial property, unquoted shares, certain insurance policies. Paying full SIPP charges to hold index funds is a common and avoidable cost.
Sources
Regulator references
- FCA consumer information · Financial Conduct Authority · 2025The regulator's own consumer guidance on the products discussed here.Last verified: 2026-09-07
- Tax on your private pension contributions · GOV.UK · 2025The relief, allowance and charge framework the whole post sits inside.Last verified: 2026-09-07
- Workplace pensions · GOV.UK · 2025The statutory auto-enrolment framework and who it covers.Last verified: 2026-09-07
Calculator unit tests · the assertions this page's worked example is checked against, and their last result
Changelog
- 2026-09-07 — initial publish (new format)
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Jordan Reeves
Founder of Talk Through Wealth. A software engineer for over a decade before turning to retirement planning, Jordan built the projection engine after watching family members get fragmented, country-by-country advice that never reconciled. He writes about retirement the way the engine computes it: month-by-month, lifetime-long, and skeptical of any rule of thumb that hasn't been run through the math.