Self-Invested Personal Pension (SIPP)
Frequently Asked Questions
Do I meet the SIPP eligibility requirements?
Anyone with an existing UK registered pension, whether it is a defined benefit (DB) or a defined contribution (DC) pension, may become a member of a UK SIPP regardless of where they are tax resident. If you are not a UK tax resident, and do not have an existing UK pension, most SIPP providers would allow you to establish a SIPP, although your contributions would not qualify for tax relief.
Can pension transfers from outside of the UK be sent to a SIPP?
Yes, a SIPP can receive transfers from both UK registered pension schemes and overseas pension schemes, including Recognised Overseas Pension Schemes (ROPS), provided that the overseas pension scheme confirms that they are willing to grant the transfer.
Can a SIPP receive more than one pension transfer?
Yes, it is possible to consolidate multiple pension schemes within a SIPP.
What are eligible investments?
SIPPs allow a member to invest in “Standard Investments”. The Financial Conduct Authority (FCA) describes Standard Investments as:
‘Standard assets must be classified as a standard asset by the FCA and be capable of being accurately and fairly valued on an ongoing basis, readily realised whenever required (up to a maximum of 30 days), and for an amount that can be reconciled with the previous valuation.’
The FCA standard asset list was published in December 2015, and the following investments are acceptable:
- Cash funds
- Exchange traded commodities
- Government and local authority bonds and fixed interest stock
- Physical gold bullion
- Investment notes (structured products)
- Shares in investment trusts
- Managed pension funds
- National savings and Investment products
- Permanent interest bearing shares (PIBs)
- Real estate investment trusts (REITs)
- Securities admitted to trading on a regulated venue
- Units in regulated collective investment schemes
At what age can I access my SIPP benefits?
SIPP benefits may only be accessed from age 55.
What form do SIPP pension benefits take?
The SIPP offers a guaranteed Pension Commencement Lump Sum (PCLS) of up to 25% of the value of the pension fund. The balance of the fund may be drawn flexibly in line with the UK’s new flexible benefit regime.
How are my pension benefits taxed within a SIPP?
The guaranteed Pension Commencement Lump Sum (PCLS) of up to 25% of the value of the pension fund is not subject to UK income tax but any payments over and above this are subject to tax at the recipient’s marginal rate of UK income tax.
In instances where the pension scheme member lives overseas they may be permitted to apply to receive their pension gross of tax; instead paying tax in their country of residence. This would rest upon a successful application for tax relief where a suitable double taxation treaty exists between the UK and the member’s country of residence.
Is there tax relief on contributions into a SIPP?
Tax relief on contributions into the pension scheme may or may not be available; depending on the individual’s personal circumstances and residence status:
What is the annual allowance (£)?
The annual allowance is fixed at £40,000 for the 2016/17 tax year: however, this amount may decrease in instances where
- the individual has previously flexibly accessed their pension benefits, or
- the individual has income greater than £150,000.
Please note: A tax charge will be payable in cases where contributions are made that exceed the annual allowance.
Am I eligible if I am no longer a UK resident?
Even an individual who is no longer resident in the UK, but is a member of a registered pension scheme, qualify as a relevant UK individual for a tax year, provided they meet both the following prerequisites:
- The individual was resident in the UK at some time during the previous five UK tax years; and
- The individual became a member of the pension scheme while they were resident in the UK.
Such individuals may qualify for tax relief on contributions up to a minimum amount of £3,600.
Does the annual allowance restriction apply should I transfer another pension to a SIPP?
The annual allowance only applies to new savings and not to the transfer of existing pension schemes.
Would I require financial advice?
Yes, we strongly encourage individuals to remove as much uncertainty from their investment portfolios as possible by taking advantage of specialist advice.