Scottish Widows, Irish Nationwide and Investec Bank have the best interest rates on their SIPP cash accounts but shopping around is essential, according to Defaqto.
Its latest report reveals the average default cash account interest rate is a meagre 0.21% on a £5,000 balance, with rates varying wildly between providers.
"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," says David Abbis, insight analyst for wealth management at Defaqto.
"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.
"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."
The Defaqto analysis says the Scottish Widows Bank Pension Fund Deposit account provides instant access and an interest rate of 1.75% on funds over £500 and 2% on funds of £50,000 or more.
Irish Nationwide's instant access SIPP cash account provides 2.35% for funds of £25,000 or more while Investec bank gives 2.25% on the same sum, although the bank requires a month's notice ahead of withdrawals.
Fixed rate bonds and fixed term deposits also figured highly in the report. The Irish Nationwide one year fixed rate bond provides 3% on funds of £25,000, whilst the Scottish Widows five year fixed term pension fund deposit gives 4% on funds of £10,000.
Succeeding co-founder Simon Rogerson
Janus Henderson Global Dividend Index
More than 10 million shares allocated
Long-term strategic holding
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