| TL;DR: Percentage-based platform fees, common for funds, scale up as your pot grows, while flat or capped fees, common for ETF and share dealing, do not. This means ETFs often become relatively cheaper than funds on the same platform once a SIPP reaches a certain size. Last reviewed July 2026 |
| PENSIONS : SIPP FEES, ETFs VS FUNDS |
SIPP platforms typically charge either a percentage-based fee, which scales with the value of your holdings, or a flat or capped fee structure, more commonly applied to ETFs and shares. Because a percentage fee grows in cash terms as your pot grows while a flat fee does not, ETFs can become considerably cheaper than an equivalent fund on the same platform once your pension reaches a meaningful size.
KEY FACTS
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The two common charging structures
Most UK SIPP platforms use one of two broad charging models, sometimes a combination of both depending on what you hold. A percentage-based fee charges a proportion of the total value of your holdings each year, commonly used for funds such as OEICs and unit trusts. A flat or capped fee charges a fixed amount regardless of portfolio size, more commonly applied to ETFs and individual shares, sometimes with a maximum monthly or annual cap.
Understanding which structure applies to which part of your portfolio on your specific platform is the starting point for comparing costs, since many platforms apply different fee structures to funds versus ETFs and shares within the same account.
Why the cheapest option changes as your pot grows
A percentage-based fee grows in absolute cash terms as your portfolio value increases, since the same percentage applied to a larger number produces a larger fee. A flat or capped fee stays the same in cash terms regardless of portfolio size, once you are above the point where the cap applies, which means the effective percentage cost actually falls as your portfolio grows.
| Portfolio value | 0.25% platform fee (funds) | £10/month flat fee (ETFs) |
| £20,000 | £50 a year | £120 a year |
| £100,000 | £250 a year | £120 a year |
| £250,000 | £625 a year | £120 a year |
This illustrative comparison shows why a percentage-based structure that looks competitive at a smaller portfolio size can become considerably more expensive than a flat-fee ETF structure once a pension pot reaches a meaningful size, even though the headline percentage figure never changes.
Dealing charges are the other half of the comparison
ETFs and shares typically incur a dealing charge each time you buy or sell, which funds on many platforms do not, since fund trading is often included within the platform's percentage fee rather than charged separately. This means an investor who trades ETFs frequently can accumulate meaningful dealing costs that partly offset the advantage of a lower flat platform fee.
Many platforms offer a discounted dealing charge, sometimes free, for scheduled regular investment purchases set up in advance, compared with the cost of an ad hoc one-off trade. For an investor making regular monthly contributions into ETFs, using a regular investment plan rather than dealing manually each month can meaningfully reduce the total dealing cost over a year.
The product's own charges matter just as much as the platform fee
Separate from the platform fee, every fund and ETF carries its own ongoing charges figure, reflecting the cost of managing that specific product, which is deducted from the fund's returns rather than billed separately. Two funds or ETFs tracking the same index can have meaningfully different ongoing charges figures, and this difference compounds over time in exactly the same way platform fees do.
A genuinely fair comparison between a fund-based and an ETF-based approach on the same platform needs to account for the platform fee, any dealing charges, and the underlying product's ongoing charges figure together, rather than comparing platform fees alone, since a cheaper platform fee can be offset by a more expensive underlying product, or vice versa.
Working out the total cost for your own situation
Calculating the total annual cost under each structure, using your actual or expected portfolio size, typical number of trades per year, and the ongoing charges figures of the specific funds or ETFs you would actually hold, gives a genuinely comparable figure rather than relying on headline fee percentages or flat amounts in isolation.
Because platform fee structures and caps change periodically, and because ongoing charges figures vary between individual products even within the same asset class, this calculation is worth revisiting periodically as your portfolio grows, rather than assuming the structure that was cheapest at a smaller portfolio size remains the cheapest indefinitely.
When switching structure or platform is worth the effort
If a calculation shows a meaningful, ongoing cost saving from switching between a percentage-based and a flat-fee structure, or between platforms entirely, the saving needs to be weighed against the practical cost and effort of transferring, including any exit fees from the current platform and the time the transfer itself takes, particularly for an in-specie transfer of existing holdings.
For a SIPP that has grown substantially since it was first opened on a percentage-fee structure, periodically checking whether a flat-fee or capped alternative would now be cheaper is a reasonable ongoing habit, since the answer to that question can genuinely change over time as the portfolio itself grows.
Why this decision is worth revisiting, not just making once
Platform fee structures themselves change periodically as providers adjust pricing to remain competitive, independent of how your own portfolio grows, which means the cheapest structure for your specific situation can shift for reasons entirely outside your control as well as because of your own portfolio's growth. Setting a reminder to review platform costs every year or two, comparing your actual usage pattern against current published fee structures, is a more reliable habit than assuming an initial choice remains optimal indefinitely.
Why diversification across several EIS investments matters
Given the genuinely high failure rate expected among early-stage companies, spreading EIS investment across several different companies, rather than committing the full amount to a single business, is a commonly recommended approach to managing the risk, since the loss relief and tax-free growth on successful investments are designed to work across a portfolio of EIS holdings rather than guaranteeing the outcome of any single investment. Some EIS funds exist specifically to provide this spread across multiple qualifying companies within a single investment.
Where EIS opportunities are typically found
EIS-qualifying investments are commonly accessed either directly through a company raising funds under the scheme, or through an EIS fund managed by a specialist investment firm that selects and diversifies across multiple qualifying companies on the investor's behalf. Each route carries different fee structures and levels of diversification, which is worth understanding alongside the tax relief itself before committing to a specific opportunity.
| Note: Platform fees, dealing charges and product ongoing charges figures change over time and vary between providers. Compare current, published figures directly on the specific platforms and products you are considering. |
| RELATED GUIDES |
| Disclaimer: Kael Tripton Ltd is an independent editorial publisher, ICO-registered (ZC135439). This guide is general information, not financial, tax or legal advice, and carries no commission or referral arrangement. Your circumstances may differ; consider speaking to a regulated adviser or HMRC directly before acting. Figures and thresholds change; verify current numbers with the primary sources listed below. |
Frequently asked questions
Are ETFs always cheaper than funds in a SIPP?
Not always. It depends on your portfolio size, how often you trade, and the specific products' own ongoing charges. Flat-fee structures common for ETFs tend to become relatively cheaper as a portfolio grows larger.
Why does my platform fee keep rising even though the percentage has not changed?
A percentage-based fee is calculated on the current value of your holdings, so the cash amount charged rises as your portfolio grows, even if the percentage rate itself stays the same.
Do ETFs have dealing charges that funds do not?
Often, yes. Many platforms charge a dealing fee per ETF or share trade, while fund trading is frequently included within the platform's ongoing percentage fee.
What else should I compare besides the platform fee?
The ongoing charges figure of the specific fund or ETF itself, and any dealing charges, both of which affect total cost as much as the platform fee.
| SOURCES |
