Cautious investors can currently earn more than 3 per cent on pension cash by holding a fixed-rate bond in a Sipp. But they need to find a bank or building society that will accept cash from a pension trustee, and a Sipp provider that allows external accounts to be held at low cost.

European Pensions Management (EPM) – which offers low-cost share or fund Sipps as well as fully bespoke plans – has established links with a number of external banks, to give clients access to high-rate term deposits. Sipp administration manager Philip Thomas-Baker advises clients to go via brokers that can offer exclusive deals. At present, Sipp holders going through London & Country can access an exclusive 15-month bond from Dunbar Bank paying 3.25 per cent, or get 3.30 per cent over 12 months from Anglo Irish, or up to 3.25 per cent from Cater Allen. EPM takes no charges or commission for opening these accounts on behalf of clients, and seeks to have the interest rates enhanced in lieu of any commission payments.

Standard Life gives Sipp holders a choice of its own fixed-rate bond paying 2.75 per cent until 15 February 2010, or an external account from any UK or overseas bank that will accept pension trustee funds. But external accounts holding less than £500,000 trigger additional annual Sipp charges of between £156 and £416, depending on the balance.

AJ Bell’s SippCentre pension will accept any Sipp-qualifying banking facility but treat it as an “off-panel” investment, incurring a £30 transaction fee, and an additional £30 quarterly administration fee. Its bespoke Platinum service imposes no additional fees, but has a more expensive charging structure overall.

James Hay offers a Special Deposit Account for balances above £50,000, currently paying 1.2 per cent over a 12-month term. It also allows external cash accounts via a discretionary investment manager.

One alternative to looking for a fixed-rate bond that accepts Sipp cash is to use the new term-deposit auction service from Maxbips.com. Savers can register with the website as pension scheme investors, paying £49 a year, and invite banks and building societies to offer term deposit rates on £30,000 or more