SIPP vs RRSP
Both wrappers give upfront tax relief on contributions and grow tax-deferred until withdrawal. The SIPP\'s 25% tax-free lump-sum and tapered allowance are unique to the UK; the RRSP\'s carry-forward room is unique to Canada. Side-by-side breakdown.
| Feature | SIPPUK — Self-Invested Personal Pension | RRSPCanada — Registered Retirement Savings Plan |
|---|---|---|
Annual allowance (2025/26) | £60,000 | 18% earned income, max ~CAD $32,490 |
Tapered for high earners | Yes — reduced £1 per £2 over £260k adjusted income, floor £10k | |
Carry-forward unused room | 3 prior years | Indefinite |
Tax relief on contributions | At marginal rate (20/40/45%) | Deduction at marginal rate |
Tax on growth | ||
25% tax-free lump sum at retirement | Yes — up to £268,275 Lump Sum Allowance | |
Tax on withdrawals (post-retirement) | Income tax on 75%; first 25% tax-free | Ordinary income at marginal rate (full amount) |
Earliest withdrawal age | 55 (rising to 57 in 2028) | Any age, but withholding applies; convert to RRIF by 71 |
Required minimum withdrawals | RRIF minimum withdrawals from 71 onwards | |
First-home withdrawal | Up to CAD $60k via Home Buyers' Plan | |
Investment flexibility | Self-directed — funds, shares, ETFs, sometimes property | Self-directed — anything broker offers |
The 25% tax-free lump-sum is the SIPP's unique advantage
When you start drawing your SIPP from age 55 (rising to 57 in 2028), you can take up to 25% of the value as a tax-free lump sum, capped at the £268,275 Lump Sum Allowance. The remaining 75% gets taxed as income at your marginal rate when withdrawn. This pattern means a £1m SIPP could yield £250k completely tax-free.
The RRSP has no equivalent. Every dollar that comes out of an RRSP (or its post-71 successor RRIF) is fully taxable as ordinary income in the year of withdrawal. The Canadian "tax-free" play is the TFSA, which has a much smaller annual limit (~CAD $7k) and is funded with after-tax money.
For UK savers approaching retirement, the lump-sum is a significant strategic tool — used right, it's the single biggest tax-free amount most people will ever realise.
Tapering: the SIPP's downside for high earners
The SIPP allowance starts at £60,000 in 2025/26 but tapers down for high earners: above £260,000 adjusted income, the allowance drops by £1 for every £2 earned, with a floor of £10,000 once adjusted income hits £360,000+. "Adjusted income" is essentially salary plus bonuses plus pension contributions plus most investment income.
The RRSP has no taper — the 18% formula applies regardless of income, capped at the dollar maximum. A high-earning Canadian gets the same RRSP room as a moderate earner; a high-earning Brit gets meaningfully less SIPP room.
For UK earners over £260k, the workaround is carry-forward: pull in unused allowance from the prior 3 years to push more in during a low-income year (e.g. a sabbatical, a redundancy gap, or a year between roles). The RRSP's indefinite carry-forward is more forgiving — Canadians can skip a decade and catch up later with no penalty.
Withdrawal age and required minimums
SIPPs lock funds until age 55 (57 from 2028) — early access requires extreme circumstances and triggers severe tax penalties. After 55, you choose when to start drawing; there's no required minimum.
RRSPs have no minimum age for withdrawal — you can pull money out at 30 if you want, subject to withholding tax and including the amount in your taxable income. But by Dec 31 of the year you turn 71, the RRSP must convert to a RRIF (Registered Retirement Income Fund) and required minimum withdrawals begin. The RRIF formula starts at about 5.28% of the balance at age 71 and rises with age.
For Canadians who want to keep their retirement savings invested past 71, the alternative is to annuitise or leave funds in non-registered accounts after the RRIF withdrawals. The SIPP doesn't force any withdrawal at any age.
Frequently asked questions
Can I have both a SIPP and an RRSP?
Yes if you've worked or live in both countries. A common pattern: a Brit working in Canada keeps a SIPP from their UK employment and contributes to an RRSP while Canadian-resident. Each country's wrapper is recognised under the Canada-UK tax treaty for treaty-resident filers.
Which is better — SIPP or RRSP?
Whichever your tax system offers. UK residents get the SIPP's 25% tax-free lump-sum advantage; Canadian residents get the RRSP's indefinite carry-forward and earlier-access flexibility. Cross-border filers may use both.
What's the SIPP equivalent of the RRSP Home Buyers' Plan?
There isn't one — UK pension rules don't allow a temporary withdrawal for first-home buying. The closest UK equivalent is the LISA (Lifetime ISA), which is a separate after-tax wrapper with a 25% government bonus on contributions, withdrawable for first-home purchase before age 60.
Can I roll a SIPP into an RRSP if I move to Canada?
Generally no — the Canada-UK treaty doesn't provide a clean transfer mechanism between the two wrappers. You can leave the SIPP in place and continue to grow tax-deferred, but new contributions are blocked once you're no longer UK-resident. WealthWatch can track the SIPP balance alongside your Canadian accounts post-move.
Does WealthWatch track both?
Yes. Connect Hargreaves Lansdown / AJ Bell / Vanguard UK / Interactive Investor for SIPP tracking, plus your Canadian broker for RRSP. Both contribution-room calculations run on the dashboard with appropriate currency conversion.