SIPPs Robo Advisors 

SIPPs are the ideal way for investors to create their own pension portfolios and receive generous tax advantages. If you can hold your money until 55 years of age, and are confident in deciding which funds to invest in, you should consider opening a SIPPs account. But can you open a SIPPs account with a robo advisor?

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FXTM Review
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Moneyfarm
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Scalable.Capital
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Schwab Intelligent Portfolios
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Munnypot
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MarketRiders
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Nutmeg
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Ginmon
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Easyfolio
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In the United Kingdom, there are a number of different options that help residents save for their retirement. On this site, we have covered Individual Savings Accounts in depth, including explaining the Cash Individual Savings Account, Innovative Finance Individual Savings Account, the Lifetime Individual Savings Account, and the Stocks and Shares Individual Savings Account. The Stocks and Shares ISA is one of the more popular options with robo advisor customers. However, we are starting to see some of the UK robo advisors starting to show interest in trying to figure out how to offer what is called a Self-Invested Personal Pension, or SIPP for short. 

Although SIPP robo advisors are not regularly available yet, it is more than likely only a matter of time before they do. To get ready for when that does happen, let’s have a look in more detail about what a Self-Invested Personal Pension is.

What is a Self-Invested Personal Pension?

A Self-Invested Personal Pension is not an investment in itself. You don’t go out and buy a SIPP. Instead, a SIPP is a “wrapper” or “basket” that holds investments until you are ready to retire and want to withdraw funds as retirement income. More specifically, a SIPP is a type of personal pension plan that allows you to put money away until you are ready to retire, and choose how you want the money in the pension to be invested. In contrast to more traditional pensions plans, which do all the investing for you, SIPPs require you to figure out how you are going to invest the money in the fund. This puts the onus on the investor to determine how to best invest their money for maximum returns at the lowest risk. 

This is why SIPP robo advisors would be so beneficial. It would provide another savings tool for investors to get more automated and well-researched portfolios, all within the SIPP wrapper. So rather than having to make decisions on what asset allocation and investments to choose, the SIPP robo advisor would do that work for you.


Tax Treatment of SIPPs

In the UK, pension plans provide tax relief on contributions. What this means is that you get any tax paid on all the money you put into your Self-Invested Personal Pension. When you earn money from your job, your company pays taxes to the government on your behalf. Depending on how much you make, this amount can be different for everyone. When you invest in a SIPP, the tax you paid when you receive your salary is paid back to you in the form of additional contributions to your SIPP. Depending on your own personal tax rate, a SIPP can provide up to a 45% tax relief on any contributions you make. 

In order to explain this properly, let’s use an example for an investor who uses a SIPP and is in the 25% tax bracket. If the investor contributes £4,000 to their Self-Invested Personal Pension, then the government will add another £1,000 into the SIPP under basic tax rate relief, making the total contribution £5,000. This extra £1,000 is automatically added to the SIPP account. To get the full 45% tax relief, the additional contributions must be claimed on the annual tax returns. SIPP providers are only allowed to claim up to the 25% amount. Once assessed the government will add the additional contributions to the SIPP account. 

To really drive home the power of this tax relief on portfolio values over time, have a look at the following chart from The Telegraph:


The difference between no tax relief, and someone in the 40% tax bracket who saves £200 per month which rises 3% per year and achieves portfolio growth of 5.5%, is a whopping £170,000.

In addition to the tax relief, all portfolio income and capital gains are not taxed while they are growing inside of the SIPP. Taxes only begin once withdrawals start to occur. All the income and gains are allowed to compound every year without having to pay any taxes on those gains. Given this benefit, it would be nice if there were no limits to the amount of money an investor could contribute to a SIPP. However, that is not the case as there are limits. 

What are the SIPP Limits?

Like most tax deferral or tax relief plans, there are maximums to the amount of money an investor can put into a SIPP. In the 2017/18 tax year, the annual Self-Invested Personal Pension limit is £40,000. That is a sizable limit and if you are able to put that amount into a pension each and every year, you will be in good retirement shape down the line! However, there is also a maximum lifetime limit for SIPPs. The lifetime allowance for contributions to a SIPP is currently set at £1 million.


What Types of Investments Can Go into a SIPP ?

Unlike traditional pension plans, where the investments are chosen for you by a committee, a Self-Invested Personal Pension allows you to choose exactly how you want to invest your contributions. Once available, this will include ETFs as that will be offered by most of the SIPP robo advisors.

However, that does not mean you can invest in whatever you want. There is a list of eligible investment options that is maintained by HM Revenue and Customs (HMRC). Here are the current eligible investments that are permitted within a SIPP: 


• Stocks and shares listed on a recognised exchange 
• Government and corporate bonds 
• Futures and options traded on a recognised futures exchange 
• Authorised UK unit trusts and open-ended investment companies and other UCITS funds 
• Unauthorised unit trusts that do not invest in residential property 
• Unlisted shares 
• Investment trusts subject to FCA regulation 
• Unitised insurance funds from EU insurers and IPAs 
• Deposits and deposit interests 
• Commercial property 
• Ground rents (except residential properties) 
• Traded endowments policies 
• Derivatives products such as a Contract for difference (CFD) 
• Investment grade gold bullion 


For most investors, and especially robo advisor clients, the most relevant will be the ability to hold stocks and shares. This will typically be done via exchange traded funds as part of a portfolio that provides diversification and matches the investor’s risk profile and investment horizon. 

Who Should consider using a SIPP ?

Do-it-yourself investing is not for everyone. Not everyone has the knowledge, skills, or time to manage their investments on their own. However, if you are comfortable making your own investment decisions and understand the process of building portfolios that have the right risk profile based on your personality, then a SIPP is a great choice. In order to be successful, you need to be prepared to take the time to research what your portfolio should look like, what investments will help you meet your objectives, and be able to regularly monitor the portfolio to rebalance it and make sure it is performing as expected. 

A SIPP robo advisor would be very helpful in this whole process. It is only a matter of time before they are available, so be sure to keep checking back as we will update this site as they are being offered. They have the potential to be a huge revenue stream for robo advisor companies and they are motivated to figure out how to provide them to potential clients.

Criteria Details

Eligibility Age: The is no eligibility age for Self-Invested Personal Pension plans 

Annual Contribution Limit: The annual contribution limit is £40,000. However, it may be lower for higher income individuals.

Lifetime Contribution Limit: The lifetime contribution limit on SIPPs is currently £1 million.

Government Tax Relief: Equivalent of 25% tax relief that is paid right into the SIPP by the government. Amounts greater that 25%, up to 45%, can be claimed as tax relief separately when filing annual taxes.

Impact on Contribution Limits to Individual Savings Plans: (ISAs) SIPP contributions do not impact the amount of money available to be invested in ISAs. SIPP contributions do not need to be counted as part of the annual ISA limits.

Investment Options: Depends on the SIPP provider, but open to a range of investment options, including stocks and shares and Government and corporate bonds. In addition, as exchange traded funds are traded on registered exchanges, they are also available to SIPP investors.

Ability to Borrow from the SIPP: It is not permitted to borrow from your SIPP.

Tax on Investment Growth (i.e. capital gains:) While the investment funds are within the SIPP, there is no taxes assessed against capital gains. Alternatively, capital losses cannot be claimed.

Tax on Investment Income: While the investment funds are within the SIPP, there are no taxes assessed against investment income, including dividend payments.

Age You Can Start to Make Withdrawals: Withdrawals can being at age 55.

What Happens to SIPPs Upon Death: SIPPs allow the owner to pass on the pension to their beneficiaries upon death. This can be done as a lump sum or by leaving the funds in the SIPP.

Available Through Robo Advisors?: Currently, there are no SIPP robo advisors available. However, most of them are planning to add this account type once the logistics have been worked out.


SIPP Robo Advisors – Availability

Unfortunately, at this time the options available to invest using a Self-Invested Personal Pension with a robo advisor is limited. Sites like MoneyFarm and Scalable.Capital both have SIPP sections on their websites, however both of them are only taking names of people who want to be notified when they roll out their SIPP accounts. Here is what the Scalable.Capital site looks like as of this writing:

At this time there is no estimated go live dates for either site so we are unable to let you know when they will be available. We also tried to contact them about when their SIPPs are live, and they were not able to confirm dates for us.

Even without the SIPP robo advisor option available right now, we strongly recommend opening a SIPP account with another provide with the hopes of being able to transfer your SIPP into your chosen robo advisor platform down the road. By doing this you get your money working for you right away as well as receive the massive tax relief benefits. The sooner you start, the bigger your retirement nest egg can become.

List of Cheap SIPP Providers

We have talked a lot about keeping costs low on this site. Since there are no SIPP robo advisors available today, we pulled together a list of the cheapest SIPP providers that you can review in order to get started. Consider each of these providers carefully, and then decide which one meets your needs the best. Your ultimate goal will be to transfer the SIPP to a robo advisor, but until that time these will get you going on the path to retirement.

• AJ Bell Youinvest: The first company to offer an online SIPP

• Alliance Trust Savings

• Barclays

• Bestinvest

• Charles Stanley Direct

• Close Brothers A.M. Self Directed Service

• Fidelity Personal Investor

• Halifax Share Dealing

• Hargreaves Lansdown

• Interactive Investor

• iWeb

• James Hay Modular iPlan

• Saga Investment Services

• Strawberry

• TD Direct Investing

• Telegraph Investor

• The Share Centre

• Trustnet Direct

• Willis Owen

Each of these firms offer SIPPs, and although these are among the cheapest, it is worthwhile really understanding the fees they each charge. You want to keep the fees as low as possible to ensure most of your money goes towards your retirement, and not someone else’s pocket!

In Summary, You Should Consider Using a SIPP if:

• You want to invest in funds and/or in shares directly

• You want to hold your investments in a tax advantaged account

• You have a long-term investment horizon – your money will be locked in the SIPP until you are 55 years of age

• You understand that you can lose money in the stock market in the short term; you are putting your capital at risk in order to go for bigger returns.


We have covered a lot of information in this article on SIPPs. To help summarise the information, we have prepared the following table which provides an overview of Self-Invested Personal Pension plans.