Like a Stocks and Shares ISA, a Self-Invested Personal Pension (SIPP) can seriously supercharge your wealth in retirement. Investors can buy a wide selection of high-returning shares, trusts, and funds in one of these products. And they can save individuals a packet in tax over time.

The latter fact is especially important, as it provides extra cash you can use to invest to boost the compounding effect on returns. Protection from capital gains tax and dividend tax often adds up to tens of thousands of pounds over two to three decades.

So how large does someone’s SIPP need to be for a monthly second income of £3,000? And how long could it take? Let’s find out.

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.

Crunching the numbers

A £3,000 cash injection a month works out at £36,000 over the course of a year. Added to the State Pension, I think investors could achieve a comfortable retirement with this sort of passive income.

And with tax relief on top of individual SIPP contributions, it’s a target I believe is very realistic to eachieve. If we had a higher-rate taxpayer contributing £300 a month, they’d receive an added boost of about £75 when they invest, worth £900 a year. Our investor would also receive an additional £900 when they complete their tax return.

If they can achieve an annual average return of 8%, they’d have built a £515,000 retirement pot after just over 27 years. But how could this be turned into a £3k monthly income? Simple — by investing in 7%-yielding dividend shares.

What should investors buy?

The problem here is that dividends are never, ever guaranteed. However, in a SIPP, individuals can build a diversified portfolio of dividend-paying stocks spanning different regions and sectors. As a consequence, there’s a great chance it could provide a reliable passive income even if one or two companies experience difficulties.

I think M&G (LSE:MNG) would be a great share to consider for an income-paying SIPP. Dividend yields at this FTSE 100 company have consistently ranged between 6% and 9% since it listed on the London stock market in 2019. The forward dividend yield here is currently 7.1%.

M&G’s a top dividend share thanks to its excellent cash generation. Annual dividends have risen every year since it was spun out of Prudential at the end of the 2010s. And it looks in good shape to keep raising payouts — its Solvency II capital ratio was an impressive 242% at the end of 2025. That’s the highest among its UK peer group.

A top SIPP selection?

On the downside, the financial services provider’s profits could drop if economic conditions worsen. That reflects the cyclical nature of its operations. But those deep pockets mean it’s in good shape to keep growing dividends even if profits disappoint.

Looking longer term, I’m confident M&G shares will keep delivering impressive dividends as demographic changes boost savings and investment product demand. Combined with the SIPP’s enormous tax benefits, I think it’s a top stock to consider for a retirement income.