What is a self-invested personal pension (SIPP)?
A self-invested personal pension is a personal pension with a much wider investment choice, allowing holdings such as individual shares, funds, investment trusts, bonds and commercial property. It offers more control than a standard personal pension, usually at a higher cost.
The ability to hold commercial property makes it particularly useful for owner-managers, who can have the pension buy the trading premises and receive rent from their own business — with the rent flowing into a tax-privileged wrapper.
SIPPs generally offer full flexi-access drawdown, which not all older personal pensions do. That alone is a common reason for consolidating into one.
The wider choice only earns its cost if it is used. For someone in a default fund, a SIPP is a more expensive way to hold the same thing.