Chip Personal Pension: how it works and what it costs

The Chip Personal Pension is a self-invested personal pension, or SIPP, that Chip is building around a single ready-made fund rather than a menu of investments you pick yourself¹. A SIPP is a type of personal pension that gives you greater control over how your retirement savings are invested², and Chip's version narrows that choice to one fund run by BlackRock³.

It is not open yet. Chip's own pages invite people to register their interest rather than open an account, and describe the SIPP as still being finalised¹. The pension is provided by Chip Financial (Investments) Ltd³.

Two features shape everything else. The fund automatically shifts from shares towards bonds as your chosen retirement year approaches¹, and the pension does not offer drawdown, so taking an income would mean transferring the pot to another provider¹. Chip's own site carries today's charges and fund details.

What the Chip Personal Pension is: a SIPP invested in one ready-made fund

A SIPP is a personal pension you arrange yourself rather than through an employer. The wider market treats SIPPs as plans that let you hold multiple investments and manage the fund yourself⁷, and some providers describe them as a do-it-yourself pension where you choose how the savings are invested⁸. Chip's version works differently: instead of a wide investment list, it puts your money into one ready-made fund and adjusts that fund automatically as retirement gets closer¹.

That makes it a narrower product than a conventional SIPP. You are not choosing shares, funds or a portfolio; you are choosing a retirement year and letting the fund manager do the rest. Chip describes the pension as one that "knows when you want to retire"⁴.

The trade-off is control. A SIPP normally gives you more say over investments than a standard personal pension², and Chip's design gives you less say than a full SIPP but more automation than a self-managed one. For someone who wants a single decision rather than an ongoing one, that is the point of the product. For someone who wants to pick funds, it is a limitation.

Chip says the pension is trusted by over 400,000 people, a figure that covers its wider customer base rather than pension members specifically¹.

How the BlackRock LifePath funds change as you near retirement

The fund behind the pension is a target-date fund, which means it is built around the year you expect to retire rather than a fixed mix of assets. Chip states that BlackRock's LifePath retirement range automatically adjusts your investments from growth-focused holdings such as equities towards more conservative ones as you approach your retirement year¹.

The staging is set out in more detail elsewhere. In the early part of your career, from 35 or more years out from retirement, the money sits in growth assets such as equities. Between 35 and 10 years from retirement, the fund gradually reduces its growth holdings and introduces a mix of less volatile assets such as bonds and gilts. Within 10 years of retirement, it switches into a final mix focused on less volatile assets¹⁰.

This is a form of life-styling, the practice of moving money into lower-risk investments as retirement approaches. Official guidance describes the same idea: as you get near the retirement age for your pension, you can ask your provider to move your money gradually into investments with less chance of falling in value in the short term, and some schemes do it automatically¹³.

The effect is to reduce the risk of a sharp market fall just before you retire, at the cost of giving up some growth in the final years. The fund does not guarantee an outcome, and the value can still fall.

How the charges work: platform fee and fund fee

Chip's charges come in two layers: what the platform charges to hold the pension, and what the fund charges to run it.

Official guidance notes that pension scheme providers often charge an amount based on the value of the pension¹⁴, and that personal pension providers usually take a percentage from the pension fund¹⁵.

Fund charges are separate and are set by the fund manager, not the platform. Chip's site carries the current figures for both layers, and they should be checked there rather than assumed, particularly because the pension has not launched.

Tax relief: the automatic top-up and what higher-rate taxpayers claim back

Pension contributions attract tax relief, and the way it arrives depends on how you pay in.

Higher and additional rate taxpayers can claim more, but usually have to do it themselves. Self-employed higher and additional rate taxpayers claim the extra back through a self-assessment tax return¹⁷.

There is a limit on how much relief you can receive. Independent guidance puts the figure at up to £40,000 each year where the money purchase annual allowance does not apply, depending on your level of earnings¹⁸. Chip states the annual allowance is generally the lower of 100% of your earnings or £60,000¹.

The two figures measure different things, so both are worth knowing: the annual allowance caps what you can pay in across your pensions, while the £40,000 figure describes the relief available in the circumstances set out above.

Combining old pension pots into Chip

Chip's pitch is consolidation: bringing old pots together so you can see your retirement in one place, invested in a single fund that adjusts as you get closer to retirement²⁰. Pension consolidation is where you bring multiple pensions together by transferring them into one provider or scheme²⁰.

You can fund a SIPP in three ways: transfer old pensions in, set up monthly contributions, or pay in a lump sum². Chip says it handles the transfer process for you once you give a few details in the app, with updates at each stage¹.

The case for combining is usually cost and admin. That is an illustration of how charges compound, not a prediction for any particular person.

The case against is losing something you did not know you had. Before transferring, Chip advises checking for safeguarded or valuable benefits such as a Guaranteed Annuity Rate, loyalty bonuses or protected tax free cash you could lose, as well as exit fees and investment choices¹. The official transfer steps are to check your current scheme allows transfers out, make sure you will not lose benefits, decide which scheme to transfer into, check whether you need to pay for financial advice, ask your current provider for a transfer value, and ask the new scheme to start the transfer²⁰. You can usually transfer or consolidate at any point unless the scheme rules list restrictions²⁰.

Where a transfer is not accepted: safeguarded benefits and guarantees

Chip will not take every transfer. It states that it cannot accept a transfer that includes safeguarded benefits or guarantees, regardless of value²¹. That is a firm rule, not a case-by-case judgement.

Safeguarded benefits are the guarantees some older pensions carry, and they are the reason a transfer can be a bad idea even when the charges look better elsewhere. You might also be unable to transfer at all if you hold a share of an ex-partner's pension following a divorce, or a scheme with special features or guarantees such as a Guaranteed Minimum Pension²².

Other providers draw the line in similar places. One SIPP provider states that transfers from defined benefit pension schemes and schemes providing safeguarded benefits are not accepted, and that transfers in of pensions already in drawdown are not currently accepted²³.

Taking your money: no drawdown option within Chip

The Chip Personal Pension does not currently offer a drawdown option¹. Chip's guidance is explicit that to access funds at retirement you would need to transfer your pension to a provider that supports drawdown⁵.

Drawdown is the option that lets you keep your pension invested and draw income as and when you wish, taking as much as you want, with the money taxed as income²⁴. It is one of several ways to take a pension, alongside taking the whole pot, buying an annuity, or taking lump sums²⁵.

For a Chip pension holder, that means the plan is a saving vehicle rather than a retirement income product. At the point you want an income, you would move the pot elsewhere, and the new provider's charges and options would apply from then on. That is a step to plan for rather than discover at the point of retirement.

How your pension is held and protected

Your investments are held by a custodian, which keeps them separate from Chip's own assets¹. Defined contribution pensions are expected to be ringfenced, meaning that if the pension company went bust your pension savings would be safe²⁶.

The Financial Services Compensation Scheme applies to pensions, but the scope varies by product type and there are limits to what it can pay²⁷. Where it applies to a SIPP, the FSCS normally covers the pension at 100% with an upper cap of £85,000⁶. Chip states the same £85,000 per eligible claimant figure for its pension¹. Pensions that qualify as contracts of long-term insurance are covered at 100% with no upper cap⁶.

Two limits matter. First, the FSCS does not cover investment losses from market movements or fund performance, only limited circumstances such as firm failure or mismanagement¹. Second, FSCS protection for pension advice is separate: the scheme protects pension advice so it can pay compensation if your adviser fails²⁸.

The Pension Protection Fund is a different scheme and does not apply here. It covers defined benefit pension schemes, not the defined contribution arrangement Chip offers²⁹. Almost all defined benefit schemes are covered, including the defined benefit part of hybrid schemes²⁶.

Money held in a pension usually cannot be claimed by anyone you owe money to, even if you are declared bankrupt or in a formal debt repayment plan, though money you have taken out can be²².

How to open a Chip pension, and what to do if something goes wrong

Chip's published route is to download the Chip app, go to the portfolio tab and select the Personal Pension, then connect your bank to make deposits¹. The same pattern applies across Chip's products: download the app, sign up, choose the product, connect a bank account and make a first deposit³⁰. Because the pension is not yet open, this describes the intended process rather than one you can complete today⁴.

That matters most on transfers, where the decision to give up a guarantee is yours and is usually irreversible.

On service, Chip says it runs a dedicated UK-based support team available seven days a week¹. The app uses biometric login, a six-digit PIN, bank-grade encryption built on Open Banking technology, and fraud monitoring¹.

If something goes wrong, the first step is Chip's own complaints process. If that does not resolve it, the Financial Ombudsman Service looks at disputes between consumers and financial firms. If you believe you were mis-sold a financial product, there is a separate route for that³¹. Free, impartial guidance on pension options is available from Pension Wise, and MoneyHelper covers personal pensions more broadly¹⁹.

If you have lost track of an old pension you want to transfer, the government runs a tracing service for finding pension scheme contact details³².