Can I Have More Than One SIPP Account?

A Self-Invested Personal Pension (SIPP) is a specific type of retirement savings plan that allows individuals to make their own investment decisions from a wide range of options. These plans are structured to be tax-efficient, offering tax relief on contributions and enabling investments to grow free from certain taxes. Unlike some traditional pension schemes where investment choices are limited, a SIPP provides significant control over how pension money is invested, including choices like funds, shares, and even commercial property. This flexibility makes SIPPs a popular choice for those who prefer an active role in managing their retirement funds.

Holding Multiple SIPPs

Individuals are permitted to hold multiple SIPP accounts. No statutory limit exists on the number of SIPPs an individual can open. This allows individuals to spread savings across various providers and strategies. Multiple SIPPs can be held intentionally, for diverse investment opportunities or fee structures, or unintentionally, such as when transferring old pension pots.

While permissible, holding multiple accounts introduces administrative considerations. Each SIPP operates independently, but overall pension regulations apply across all accounts.

Reasons for Multiple SIPPs

Holding multiple SIPPs offers several strategic motivations. One reason is greater investment diversification. Different SIPP providers offer unique investment funds, asset classes, or niche assets like commercial property, not always available from a single provider. This allows tailoring each SIPP to distinct strategies, such as one for high-growth and another for conservative assets.

Another motivation is optimizing fee structures. Providers have varying charges, including annual management, trading, or administrative fees. Using multiple SIPPs allows placing investments with providers offering the most cost-effective rates for specific assets, potentially leading to overall savings. Spreading savings across different SIPP providers also enhances risk management. This mitigates impact if a single provider changes terms, charges, investment offerings, or has platform issues.

Contributions Across Multiple SIPPs

When holding multiple SIPPs, contribution rules, especially the annual allowance, apply across all pension accounts combined, not per individual SIPP. The annual allowance for most individuals is £60,000, or 100% of annual earnings, whichever is lower. This limit includes personal, employer, and tax relief contributions. Exceeding this combined allowance can result in a tax charge, reclaiming tax relief on excess contributions.

Contributions typically receive tax relief, with a basic 20% rate automatically added by the provider. Higher-rate taxpayers can claim additional tax relief via their tax returns. Even with no earnings, a person can contribute a maximum of £3,600 annually, including basic rate tax relief. It is crucial for individuals with multiple SIPPs to monitor total contributions across all schemes to remain within the annual allowance and avoid unexpected tax liabilities. Unused annual allowance from the three previous tax years can be carried forward to increase the current year’s limit, provided conditions are met.

Accessing Funds from Multiple SIPPs

Accessing funds from multiple SIPPs involves specific considerations, particularly regarding the tax-free lump sum and income drawdown options. Individuals become eligible to access pension funds from age 55, rising to 57 in April 2028. A common option is a Pension Commencement Lump Sum (PCLS), allowing up to 25% of the pension pot to be withdrawn tax-free. This 25% tax-free amount applies across all pension schemes, up to a maximum of £268,275.

The remaining 75% of pension funds, after PCLS, can be accessed through income drawdown. This allows flexible withdrawals, as regular income payments or ad-hoc lump sums, which are subject to income tax. If funds are taken as an uncrystallised funds pension lump sum (UFPLS), 25% of each withdrawal is tax-free, the rest taxed as income. Funds can be accessed from one SIPP independently, or withdrawals combined across multiple accounts. However, initiating taxable withdrawals from any SIPP can trigger the Money Purchase Annual Allowance, reducing future annual contribution limits to £10,000 across all schemes.

Consolidating Your SIPPs

Consolidating multiple SIPPs involves transferring funds from various pension accounts into a single, centralized SIPP. This simplifies retirement savings management by reducing providers and paperwork. Many individuals accumulate multiple pension pots throughout their careers, especially after working for several employers. Bringing these together into one SIPP offers a clearer overview of total savings and investment performance.

Reasons for consolidation include simplified administration, meaning fewer statements and login details. It can also lead to lower overall fees, as some providers charge higher fees on smaller, separate pension pots. The process involves selecting a new SIPP provider, applying for the transfer, and providing existing pension policy details. While consolidation offers benefits like easier tracking and better investment control, it is important to review any exit fees from existing providers or loss of valuable benefits, such as guaranteed annuity rates, before transferring.