SIPP (Self Invested Personal Pension)
- Overview
- Contributions & Allowances
- Retirement Options
- Frequently Asked Questions
SIPP Frequently Asked Questions
How much can I invest/contribute?
If you are employed or self-employed, you can put up to 100% of your earnings (up to £255,000 per annum) in any one tax year minus any other pension contributions in the same year. If you are retired or not earning money, you can invest up to £3,600 per year.
There are no limitations on the number or type of pension plans you can contribute to. So, for example you may have a SIPP even if you are in an occupational scheme.
You will receive tax relief on yearly contributions up to:
- £3,600 gross if you are a Relevant UK Individual* (even if you have no earnings).
- or 100% of your UK earnings at your highest rate of tax, whichever is greater.
* In general terms, you are a 'Relevant UK Individual' if you are a UK resident or your earnings are subject to UK income tax.
The annual allowance
From 6th April 2006 an annual allowance applies to all contributions that you or any third party (including an employer) makes. This will be £255,000 in the tax year 2010/2011. Contributions above annual allowance subject to an annual allowance charge. The annual allowance rises each year. Known rises are as follows:
SIPP Benefits
- Your own personal retirement strategy.
- An ideal shelter for bonuses and lump sums.
- Full range of investment options; UK & international equities, bonds & gilts, investment trusts, unit trusts, OEICs, REITS and Exchange Traded Funds.
- Easy access to your plan online or by phone.
- Access to normal trading facilities and extensive company research.
Risks
- If you have any doubts about the suitability of a SIPP or you need further advice, you should seek advice from a suitably qualified financial advisor.
- The value of investments held in a SIPP can fall as well as rise and are not guaranteed. You may get less back than the amount invested which may effect the value of the income you receive in retirement.
- Please note that tax benefits mentioned are subject to change in the future.
| Tax Year | Annual Allowance |
|---|---|
| 2010 / 2011 | £255,000 |
| After 2010/11 the annual allowance may rise by order of the Treasury. | |
Lifetime allowance
The lifetime allowance is the maximum amount of pension savings that can benefit from tax relief. It applies to the total pension savings from all of an individual's registered pension schemes. The lifetime allowance rises to £1.8 million by 2010/2011.
| Tax Year | Lifetime Allowance |
|---|---|
| 2010 / 2011 | £1.8 million |
| After 2010/11 the annual allowance may rise by order of the Treasury. | |
How do I gain tax relief?
Contributions made to personal pension plans receive tax relief at your highest marginal rate. Contributions are paid net of basic rate tax so to pay in £100 you need only contribute £80. If you are a higher rate taxpayer, additional relief of a further 20% (subject to restriction if you earn more than £130,000) is reclaimed from HMRC via self assessment in the normal way, making an effective net cost of £60 based on the above example.
What are my retirement choices?
SIPPs normally let you take benefits from 55. You have a number of options as to how and when you take your benefits. View full details on our retirement options page.
Can I transfer another pension into my TD Waterhouse SIPP?
Most types of pensions can be transferred into a SIPP. You should take professional advise on whether this is suitable for you.
Can I invest in residential property?
No, you can however, invest in property funds and REITs.
Can I open a child SIPP with TD Waterhouse?
No, we don't offer a child SIPP at present.
Can I withdraw my money?
It is not possible to make withdrawals until the age of 55.
Can my employer contribute?
Yes, your employer can contribute to your SIPP.
Can I hold a SIPP with TD Waterhouse as well as other pension plans?
Yes.
When can I access my pension?
You can access your pension anytime between the ages of 55 and 77.
Do I have to purchase an annuity at age 77?
No. You can draw an income, subject to certain requirements and suitability, through an Alternatively Secured Pension. However, this could be subject to change.
