Ready-made vs DIY SIPPs: What’s right for you?

Ready-made SIPP portfolios are like picking a ready-meal rather than cooking from scratch: you put your pension into a self-invested personal pension (SIPP) and instead of selecting every investment yourself, you choose a pre-built bundle of funds. Since the pension provider groups different funds into one option, you don’t have to pick each one individually. And many pension providers offer “default” or ready-made funds where the mix is selected for broad use, rather than you individually choosing each fund on your path to retirement. This could make pension investment simpler for those who don’t want to spend time choosing and monitoring lots of funds.

Construction of ready-made portfolios

When you choose a ready-made portfolio for your pension, the fund manager picks a mix of investments to help your money grow over time. They choose different types of assets, like stocks and bonds. Whilst stocks can grow quickly, they can also go up and down a lot. And while bonds are usually steadier, they normally grow more slowly. This mix is called diversification, and it can help to spread risk. For example, if one investment doesn't do well, others might do better, balancing things out.

Ready-made portfolios are designed to be well-diversified. This careful spreading of investments can help reduce the risk of big losses and gives your pension a better chance of steady growth over time. And larger, consolidated schemes can benefit from increased buying power, lower costs, and greater investment diversification.

Management and fee structure

When you invest in a ready-made pension, there are usually management fees that pay for the people and systems managing your money. These fees can be:

• Percentage-based fees – a small percentage of your pension pot is taken each year. For example, if your pot is £1,000 and the fee is 0.5%, you'd pay £5 annually.
• Flat fees – a single fixed amount charged each year, regardless of your pot size. For example, if a provider charges a £10 flat fee, you’ll pay £10 annually whether your pot is £100 or £1,000.

In the UK, there's a charge cap to protect savers. The cap is set at 0.75% per year for default pension funds, which are the ones most people are automatically enrolled into. This means that if your pension pot is £1,000, the maximum you'd pay in fees is £7.50 annually.

Some pension schemes use a combination charge, which includes both a percentage-based fee and a flat fee. However, there's a rule to protect smaller pots: if your pension pot is £100 or less, the flat fee part of the charge can't be applied. This helps ensure charges don't eat into a pension pot.

It's important to understand how fees work because they can affect how much money you have when you retire. Even small differences in fees can add up over time. For example, a 0.5% fee might not sound like much, but over many years, it can reduce the value of your retirement savings.

A DIY SIPP is a type of personal pension that can offer you more control over your retirement savings. Unlike traditional pensions, where the provider makes the investment choices, a DIY SIPP allows you to choose your own investments. This could appeal to experienced savers who want to be hands-on with their pension and have a good understanding of the financial markets.

With a DIY SIPP, you can invest in a wide range of assets, including:

• shares (equities)  - this gives you ownership rights to a company. Equities can be categorised by geography or company size.
• funds – or money from many investors that's pooled together and used to buy a diversified group of assets (called a "portfolio"). These assets can include shares, bonds and commercial  property. And it's worth noting that funds can be actively managed or index tracker funds.
• ETF (Exchange‑Traded Fund) - an investment fund you can buy and sell on a stock exchange—similar to a share, but it holds a basket of underlying investments.
• investment trusts – are companies that invest in a diversified portfolio of assets and are listed on the stock exchange.

These options allow you to build a portfolio that aligns with your investment goals and risk tolerance. If you’re not sure of what your investment risk tolerance may be, check out our Risk Profiler. Answer eight questions to help you understand your attitude to investment risk. 

Platform and transaction fees

Once you’ve decided that a DIY SIPP is right for you, the next step is choosing a platform to manage it. Each platform is a bit different. Some may ask for a minimum amount to open an account, while others let you start with any balance. The main thing to look at is how they charge for managing your investments. Some charge a flat yearly fee, while others take a small percentage of the money in your pension pot.

Understanding the costs associated with your pension is vital, as even small differences can significantly impact your retirement savings over time.

Ready-made pensions vs DIY SIPPs

Ready-made pensions are pre-built plans managed by professionals. You simply choose a portfolio, and the provider takes care of the investments for you. Fees vary: some charge a percentage (like 0.75% on the first £30,000, 0.6% above that), others use a flat rate. It’s important to compare providers to find the best deal for your needs.

Managed pensions are similar but can be more flexible. Professional fund managers actively decide where to invest your money, adjusting the portfolio as needed. Some portfolios are checked and rebalanced regularly. Fees usually range from 0.25% to 0.75% of your pension pot, plus any fund costs. Expert shortlists (or model portfolios) are collections of funds picked by specialists, making it easier to choose. These typically charge 0.25% to 0.50%, plus platform or performance fees. Regular reviews help keep your investments diversified and on track. Even if you don’t pick each fund, your money is protected by strong governance rules.

DIY SIPPs give you full control. You choose and manage your own investments, which means more flexibility. Platform fees can be flat monthly charges (for example, £5.99 or £12.99), and you may pay trading fees each time you buy or sell. Watch out for hidden costs like exit fees or extra admin charges, as these can quietly reduce your pension pot.

When saving into a pension, it may seem like you only have two choices: taking full control (DIY) or paying someone else to entirely manage things for you (managed portfolio).

But there’s another way. If you like control, but don’t want to make every single decision yourself, then expert shortlists may be worth exploring. These are sets of funds or pre-built portfolios chosen by investment experts so you can pick one that fits how much risk you want and how much time you have left until retirement. The providers of expert shortlists offer ready-made investment options and model portfolios to give people a simple choice without having to pick lots of individual funds. They aim to deliver good governance and careful investment strategy for savers, which means you get some of the benefit of professional oversight without fully handing over control.

If you have more than one pension, bringing them together into a single SIPP can make life easier. Transferring pensions might sound complicated, but with the right steps and support, it can save you time, cut costs, and give you a clearer picture of your retirement savings. It might sound complicated, but breaking it down step by step helps.

1. Check your current pension – first, make sure your existing scheme allows transfers and that your chosen SIPP can receive them. Also, make sure to check valuable benefits you could lose, exit fees and investment choices. Investing in a SIPP offers the potential for better returns than cash savings over the long term (5+ years). But there are risks, the value of your investments may go down as well as up, and you may get back less than has been paid in.
2. Use our resources and tools – second, you can help boost your confidence around pension transfer knowledge by checking out a few of our articles, like:
   
   Should I combine my pensions into one pot?
   How much does it cost to transfer a pension?
   What is the transfer value of a pension?
   
   And as you’re building your confidence, you can check out our tools to help you sieve through the numbers, like our:
   
   Pension calculator– to work out what your pension could be worth.
   Annuity calculator – to discover how much guaranteed income could come your way, for the rest of your life.
   Inflation calculator – to help measure the impact of inflation on your savings and investments over a selected period.
3. Explore financial advice – third, check whether you’d benefit from financial advice. Even if you’re confident handling your pensions, getting advice can help you make informed decisions.
   
   If you’re transferring a defined benefit (final salary) pension worth over £30,000, financial advice is legally required. If you're unsure about any of these points, have a chat with our Aviva Financial Advice Team, who can help you decide what makes most sense for your goals and circumstance.
4. Start the transfer – finally, once you’re sure about going through with the transfer, reach out to your current provider and your new SIPP provider.
   

Transferring and consolidating pensions doesn’t have to be stressful. With the right tools and advice, it can give you a simpler, clearer, and more cost-effective way to manage your retirement savings.

If you're looking to build your pension with us, you have two main options: ready-made funds or self-select funds. Both are designed to help you grow your savings for retirement, but they work in different ways.

Ready-made funds: Universal Retirement Fund and 'Experts' Shortlist'

Our Universal Retirement Fund is a simple, hands-off option. You choose your expected retirement age, and the fund automatically adjusts your investments over time to match your changing needs. It’s like setting it and forgetting it, with the comfort of knowing that your money is being expertly managed for you.

For a bit more flexibility, our Experts’ Shortlist offers a selection of funds picked by our investment experts. These funds are chosen for their potential to deliver good long-term returns, considering factors like income and capital growth. It’s a step up from fully managed funds, giving you more control while still benefiting from professional selection.

Self-select funds: Take control of your investments

If you prefer to choose your own investments, our self-select funds allow you to pick from a wide range of options. You can invest in individual UK shares, exchange-traded funds (ETFs), and investment trusts amongst others. This approach is ideal if you're comfortable making investment decisions and want to tailor your portfolio to your specific goals and risk appetite.