May 2026 : 12 min read
A SIPP isn't just for people building a pension from scratch. In the final years before retirement, and in the draw-down phase that follows, it can be a genuinely useful tool. Here's what I've been working through.
I have a decent DC pension pot . It sits in a workplace scheme from my former employer. I'm not planning to access it until I'm 65. And I've been wondering - should I move it into a SIPP?
I haven't decided yet. This post is my honest working-through of the question rather than a report on a decision already made.
But in thinking it through I've found myself covering ground that I suspect is relevant to a lot of people in a similar position - approaching retirement with a significant workplace pension pot, uncertain whether to leave it where it is, consolidate it, or move it somewhere with better terms for the draw-down phase ahead.
The practical content in this post is useful regardless of whether my own answer turns out to be yes or no. And I'll be honest about where my thinking currently sits.
As always - I'm not a financial adviser and this isn't personal advice. For a decision involving a pot of this size, professional independent advice is warranted. The conversations I'm describing here are ones I intend to have with an IFA before making any decision.
What a SIPP actually is - briefly
A Self-Invested Personal Pension is a pension wrapper - a tax-efficient vehicle for retirement savings - that gives you more control over where your money is invested and, critically for early retirees, how you manage the draw-down phase.
The tax treatment is identical to any other pension. Every £80 a basic-rate taxpayer contributes becomes £100 in the pension - HMRC automatically adds the 20% tax relief top-up. Higher rate taxpayers can claim an additional 20% through self-assessment, meaning a £60 personal cost becomes £100 in the pot. The London Report
The key difference from most workplace pensions is investment choice and flexibility. Where a workplace pension typically offers a limited range of funds chosen by the employer - often defaulting to a lifestyle profile that gradually de-risks as you approach a target retirement age - a SIPP lets you choose from thousands of funds, ETFs, investment trusts and shares. And for draw-down, many SIPPs offer a more flexible and transparent fee structure than old workplace schemes.
For someone in the accumulation phase - still working, building the pot - the main SIPP questions are about contributions and investment strategy. For someone approaching or in early retirement, the questions shift. The draw-down mechanics, the platform fees and the consolidation of multiple old workplace pots become the primary considerations.
The final years opportunity - if you're still working
Before getting to the consolidation and draw-down questions, there's a specific opportunity worth flagging for anyone still working with one to three years before stopping.
The annual pension allowance is £60,000 for 2026/27. Most people contributing through auto-enrolment are nowhere near that. Which means there's often significant headroom - particularly for higher earners - to make additional contributions in the final working years.
The carry forward rule makes this even more powerful. If you haven't used your full annual allowance in any of the previous three tax years, you can carry that unused capacity forward and use it now - potentially contributing as much as £240,000 in a single tax year depending on your circumstances. WeCovr
The tax relief on those contributions is immediate and substantial. As a higher rate taxpayer, every £600 you contribute costs you effectively £600 but lands £1,000 in the pot - a guaranteed 67% return before your investments have done anything. That's the best guaranteed return available anywhere in personal finance and it expires the day you stop being a higher rate taxpayer.
If you're approaching the end of employment and haven't maximised contributions in recent years - check your carry forward capacity before your last day. The window closes when your employment income does.
For the purposes of this post I've already stopped work so this point applies to others reading rather than to me directly. But it's too important to leave out.
The non-earner contribution rule - relevant for bridge years
Here's one that does apply to me directly and that I've mentioned briefly in the workplace pensions post but want to give proper attention here.
Even if you have no earnings - no salary, no self-employment income, nothing - you can still contribute to a pension during the bridge years. If you have no relevant UK earnings you can contribute up to £3,600 gross per year - that's £2,880 from you with £720 added automatically by HMRC as basic rate tax relief. WeCovr
This applies to a SIPP as much as any other pension. Which means that during the years between stopping work and accessing the pension at 65, I could be making a modest annual contribution that keeps the tax-relief mechanism alive, adds a small amount to the pot and maintains the habit of pension saving during a period when it would otherwise be dormant.
The cash return is modest - £2,880 becomes £3,600, a £720 gain per year. Over seven bridge years that's £5,040 of free tax relief, compounding inside a tax-free wrapper. Not life-changing. Not nothing.
Whether it makes sense given my specific position - bridge years funded from ISAs and savings, pension already substantial - is a question I'll put to the IFA. But it's worth knowing the rule exists and that the pension doesn't have to simply sit frozen during the years you're not contributing through employment.
The consolidation question - do I need to move it?
This is the main question I've been sitting with.
My workplace pension pot is in a scheme administered by a provider chosen by my former employer. It was perfectly adequate while I was contributing to it through payroll. The question now is whether it's the right home for the next phase - seven years of growth followed by a sustained period of draw-down.
There are several things worth checking about any existing pension scheme before deciding whether to move it:
- Are there any guaranteed benefits worth preserving?
Some older pension schemes contain guaranteed annuity rates - rates locked in years ago when annuity pricing was more generous than the open market now offers. Transferring out of a scheme with a valuable guaranteed annuity rate is an irreversible mistake. The guarantee disappears and can't be recovered.
My scheme is a relatively modern defined contribution arrangement without a guaranteed annuity rate. But this is a non-negotiable check for anyone with an older scheme - particularly anything arranged before the mid-2000s.
- Is there a protected pension age below 57?
Some schemes have a protected pension age of 55 - the current minimum - that would be lost on transfer to a new scheme that operates under the post-2028 rules with a 57 minimum. Transferring to a new SIPP could inadvertently raise the age at which you can access the money.
My scheme doesn't have a protected lower access age that I'm aware of. But again - worth checking explicitly before any transfer.
- What are the exit charges?
Some schemes charge a market value adjustment or exit penalty on transfer - particularly with-profits policies or certain older insured funds. Worth confirming the transfer value versus the fund value before initiating anything.
- What are the ongoing charges?
This is where the consolidation case is often most compelling. Many old workplace schemes - particularly those used by employers who went with the default provider rather than negotiating institutional rates - charge more than modern SIPP platforms.
Major draw-down platforms currently include Vanguard at 0.15% capped at £375 per year - best value for large pots - Hargreaves Lansdown at 0.45% on funds, AJ Bell at 0.25%, Interactive Investor at a fixed fee from £9.99 per month and Fidelity at 0.35%. Fixed fee platforms become cheaper once your pot exceeds £100,000 to £150,000. Royal London
The fee difference matters significantly on a pot of this size. On £550,000, the difference between paying 0.45% at Hargreaves Lansdown and 0.15% capped at £375 at Vanguard is approximately £2,100 per year. Over ten years of draw-down, that's £21,000 - before compounding.
That's not an argument for automatically choosing the cheapest platform. Service quality, draw-down flexibility, ease of use and the investment options available all matter. But the fee comparison is worth doing properly before defaulting to wherever the money currently sits.
Choosing a SIPP platform for draw-down - what matters
If consolidating into a SIPP makes sense, the platform choice deserves its own consideration. The priorities for the draw-down phase are different from the accumulation phase.
During accumulation, low contribution charges and investment choice matter most. During draw-down, the flexibility of withdrawal options, the ease of managing UFPLS or phased draw-down, the transparency of charges on withdrawals and the quality of the online interface matter more.
A few things worth comparing when assessing platforms for draw-down:
Annual management charge - either percentage based or fixed fee. Fixed fee becomes more attractive as the pot grows above £100,000 to £150,000.
Dealing charges - some platforms charge per transaction when you sell units to generate income. For regular draw-down this adds up.
Draw-down functionality - can you set up regular income payments easily? Can you manage UFPLS withdrawals? Is the tax reporting clear and automatic?
Pension Wise - available free from moneyhelper.org.uk/pension-wise for anyone over 50 - provides free impartial guidance on pension access options including the different drawdown approaches. It's the right starting point for thinking through the platform choice before any commercial conversations.
Where my thinking currently sits
Honestly - I'm undecided.
The case for moving is reasonable. A modern SIPP platform chosen specifically for the drawdown phase - with transparent fees, good drawdown functionality and a clear investment strategy - is probably better suited to the next fifteen years than a workplace scheme that was designed for accumulation.
The fee comparison is worth doing properly. I need to find out exactly what my current scheme is charging and compare it to the realistic alternatives.
The case for staying is also reasonable. Moving requires administrative effort, carries transfer risk if anything is checked inadequately, and introduces a decision that needs to be got right first time. The current scheme is working. The pot is growing. There's no crisis requiring an immediate change.
One question I've also been turning over is whether to open a SIPP in addition to the existing workplace scheme rather than instead of it. The honest answer for my situation is probably not. The non-earner contributions of £2,880 per year could go into a new SIPP - but the administrative simplicity of keeping everything in one place, and the fact that the real decision is about where the main pot sits for drawdown rather than where a small supplementary amount goes, means the addition-rather-than-consolidation route doesn't obviously serve me. Your situation may differ - particularly if you have multiple old workplace pots that would benefit from a single home, or if your existing scheme doesn't accept post-employment personal contributions.
What I'm clear about is this. Before I make any decision - in either direction - I'm going to get professional independent advice. The IFA conversation I keep referencing throughout this site is going to happen before I turn 65 and before the pension access decisions become real. The SIPP question will be part of that conversation.
If the advice is to move - I'll report back on where and why. If it's to stay put - I'll report back on that too. That's what this site is for.
A quick summary of the key points
If you're still working with one to three years to go - check your carry forward capacity and maximise pension contributions before your last working day. The tax relief window closes with your employment income.
If you've stopped working - you can still contribute £2,880 per year into a pension and receive £720 in automatic tax relief, even with no earnings.
If you have an existing workplace scheme - check for guaranteed annuity rates, protected pension ages and exit charges before considering any transfer. These are irreversible traps and need explicit confirmation rather than assumption.
If you're thinking about consolidating into a SIPP for drawdown - compare fees carefully, particularly if your pot exceeds £150,000 where fixed fee platforms offer significant savings. And check the drawdown functionality specifically - the platform that's good for accumulation may not be the best for the withdrawal phase.
And in all cases - for a pot of significant size, take regulated independent advice before making any decisions. The interactions between pension consolidation, drawdown strategy, platform fees and the April 2027 IHT changes are genuinely complex and the cost of getting it wrong is real.
Tony writes about his personal journey to early retirement at freebefore65.co.uk. He is not a financial adviser. All content reflects his own experience and research and should be taken as a starting point for your own thinking, not as professional advice. Always take regulated independent advice before making pension transfer or draw-down decisions.
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