Some providers of self-invested personal pensions (Sipps) may struggle to survive the recession, advisers have warned.

These pension companies typically take a cut of the rate paid on clients’ bank deposits, so have been hit by the sharp fall in interest rates.

Some have previously taken up to 2 per cent. But with interest rates now at 0.5 per cent, Sipp providers are severely limited in how much they can take in fees.

“Any Sipp provider who relies on interest rate fees will have holes in their business model,” warned Martin Tilley at Dentons Pensions Management.

Hornbuckle & Mitchell recently raised its annual fee and said that a number of smaller Sipp providers were planning to increase their fees as well.

Standard Life also recently repriced its Sipp, which advisers said made it more expensive for holders of smaller pensions.

Advisers have also warned that providers may struggle with service as they seek to cut costs.

But larger providers insisted that it would not be in their interests either to raise charges or to skimp on service.

“Price is becoming an increasing factor in people’s decision making process, particularly in current market conditions,” said Billy Mackay at AJ Bell, the Sipp provider. “If you’re in the top five players I think it will be difficult to increase charges because competitors will pick up on that quickly.”

However, he believed there could be some consolidation among smaller Sipp providers. The top five Sipp providers control over two-thirds of the market, according to a recent report from the Financial Services Authority.

AJ Bell, Suffolk Life and Dentons, all higher end Sipp providers, said they had no plans to increase charges.

The FSA is currently reviewing the way that Sipps charge customers, with many accusing providers of levying fees that are too opaque.