Self-Invested Personal Pensions – SIPPs – are ideal for anyone who wants to take advantage of the benefits of ETFs to invest for their retirement.

SIPPs (Self-Invested Personal Pensions) offer several benefits for retirement savers. One of the main advantages is the tax relief on contributions, which can help boost the value of your retirement savings. In addition, you have more control over how your money is invested, which can allow you to choose investments that align with your goals and risk tolerance. With a SIPP, you can invest in a wide range of assets, including stocks, bonds, funds, and even commercial property. Moreover, as you mentioned, the costs of a SIPP can be lower than other pension options, especially if you choose a low-cost provider and passive investment options like index funds or ETFs. However, it's important to note that SIPPs may not be suitable for everyone, and you should consider your individual circumstances and investment goals before making any decisions.

Types of pension

Personal pension – personal pensions may be privately set up by you or offered by your employer. The size of your pension pot and retirement income largely depends on the investments you build up with your pension contributions. SIPPs and stakeholder pensions are types of personal pension. 
 
Group Personal Pension – a personal pension offered by your employer. The pension scheme is typically managed by a major financial institution such as an insurance company. Your employer may offer a SIPP option, but workplace pensions more commonly offer a restricted choice of pension funds with the emphasis on costly active management. 
 
Multi-employer (or Master Trust) – These are NEST or The People’s Pension type auto-enrollment schemes that service many different types of employers through one scheme.  
 
Defined benefit pension – Your employer is responsible for your retirement income, and there are no investment decisions for you to make. These schemes are mostly closed to new entrants. 
 
Small Self Administered Scheme (SSAS) – Highly flexible schemes that are typically used by small privately owned businesses to provide for the company’s directors, senior staff and family members. A maximum of 11 people can belong to a SSAS, which can be run by its own members. 
 
You aren’t restricted to any one type of pension and you can accumulate multiple pensions over your lifetime. In addition to the investment flexibility, there are also tax benefits to holding ETFs in a SIPP. All income and capital gains generated within the SIPP are tax-free, meaning that you can reinvest any income generated by the ETFs without being subject to income tax. This allows your investments to compound over time, potentially increasing the value of your portfolio significantly. Furthermore, when you start taking income from your SIPP, you can take up to 25% of your portfolio as a tax-free lump sum. The remaining 75% can be used to generate a regular income in retirement, which can also be tax-efficient if managed correctly.