Shop around for best SIPP cash accounts

The average default cash account used by SIPPs pays an interest rate of 0.21% on a £5,000 balance, according to analysis from Defaqto.

There is a wide variance in the rates offered and, for those that are able to do so, it really does pay to shop around for the best deal.

David Abbis, Insight Analyst for Wealth Management at Defaqto, commented: "SIPPs tend to have a default account into which cash holdings are deposited and some SIPPs only permit cash holdings to be held in their specified default cash account.  Where the SIPP does permit external cash accounts to be used, advisers should be looking for better returns on cash holdings and not accept the low default rates. This should be an integral part of their service proposition to clients and becomes increasingly important for larger cash holdings. In any case, SIPP default accounts are not intended for long term investment so cash should only be left in them while awaiting investment or to cover future fees."