Retiring with a £1m SIPP (Self-Invested Personal Pension) is a financial goal shared by most investors. After all, who doesn’t love the idea of being a millionaire and enjoying the financial freedom it provides?
The good news is, even investors from modest backgrounds can reach this milestone. But how long does it take? And how much money do you need to invest?
The path to seven figures
By consistently drip feeding small sums of capital each month into high-quality businesses, the wealth-building process eventually snowballs into something spectacular. And by leveraging the tax relief advantages of a SIPP, putting aside £500 a month is more than sufficient to get the ball rolling.
If someone’s in the Basic income tax bracket, £500 automatically gets transformed into £625 after tax relief. Assuming the portfolio generates an 8% annualised return in line with the stock market average, a pension pot could reach a £1m valuation within around 31 years. And of that, only £232,500 will have come from the investor. The rest is pure profit.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.
Exploring strategies
Tracking something like the FTSE 100 with a low-cost index fund is a terrific way to put a SIPP on autopilot. And this passive strategy guarantees that an investor’s wealth will grow at the same speed as the stock market.
However, sadly, there’s no guarantee that this speed will be 8%. In fact, if we ignore the last couple of years, indexes like the FTSE 100 struggled to achieve even 6%. And that 2% difference is enough to add another six years to the waiting time.
Luckily, stock picking might offer a solution to this problem. This active investing approach is a lot more demanding and often requires investors to have a strong stomach against volatility. Yet those who can identify winning businesses early not only reach millionaire status faster, but also require far less capital to do so.
Demonstrating success
Since 2005, there have been numerous big winners among UK shares. And Halma (LSE:HLMA) is on that list, achieving a 16.7% annualised return. At this rate, not only can SIPP investors reach millionaire territory within just 19 years, but the amount of capital required drops from £232,500 to £142,500!
Halma’s market-beating returns originated from consistent revenue and earnings growth that funded disciplined acquisitions. This, in turn, enabled the engineering enterprise to expand into new markets and niches, further fueling growth in a value-building loop.
The group’s days of delivering near-17% annual gains are likely behind it. After all, the company now has a market-cap of £12.3bn. But even in 2025, it continues to demonstrate winning traits. As such, it’s still achieving record profits as operational efficiency investments bolster margins across its diversified collection of businesses, supporting an ever-increasing dividend.
Of course, no investment’s ever risk-free. The bulk of revenue comes from the US and Chinese markets, both of which appear to be at risk of a potential economic slowdown. Even if customer demand proves to be more resilient than expected, Halma’s future growth’s still dependent on its bolt-on acquisition strategy that introduces significant execution risk. After all, if a deal underperforms expectations, profitability’s likely to take a hit.
Nevertheless, given its strong track record, I believe Halma continues to be a business worth considering for a SIPP portfolio aiming to deliver robust returns over the long run.
