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SIPP and retirement wealth FAQs

Giving you the information you need.

Here are answers to some of the most commonly asked questions:

Opening a SIPP

You may only open an Account if, at the time of opening, you:

a)     are resident, for tax purposes, solely in the United Kingdom;

b)     have a permanent address in the United Kingdom; and

c)     are not a US Person or opening an Account on behalf of a US Person.

How do I open an SIPP with you?

The quickest and easiest way to do this is online using our secure service. But if you prefer you can also apply by post, using an application form.

It’s much cheaper to buy and sell investments online than by post. One of many reasons it makes sense to manage your account online.

Who can open a SIPP?

If you are 18 or over and:

  • have earnings that count for UK income tax; or

  • are resident in the UK at some point during the tax year; or

  • want to make a transfer from another registered pension scheme

you can apply for a SIPP Account with us.

If you are the parent or legal guardian of a child under 18 you can also apply for a SIPP Account on their behalf (a Child SIPP).

We don’t accept applications by or on behalf of any US Persons.

Paying in to a SIPP

How much can I pay in?

You can pay in as much as you like each tax year, but you can only get tax relief on payments up to the greater of:

  • up to all of your relevant UK earnings in the (subject to annual allowance); or

  • up to £3,600 regardless of any earnings

Who can pay in to my SIPP?

Anyone can, including your employer, but you only get tax relief on your personal payments. These include payments you make from your own pocket or that anyone else, other than an employer or former employer, makes on your behalf.

And to qualify for the tax relief you have to:

  • have earnings that count for UK income tax; or

  • be (or be treated as) resident in the UK at some point during the tax year being claimed for or in any one of the previous five tax years.

What is the annual allowance?

It's the total that you, your employer and anyone else making payments on your behalf can together pay in or build up in any one tax year across all registered pension schemes in your name. It limits the personal payments on which you can actually claim tax relief.

For 2018/19 the annual allowance is £40,000, unless you are already taking money out from a pension, when it is more likely to be £4,000. If you are not sure which annual allowance applies to you, our Customer Services team may be able to help.

The annual allowance includes:

  • any basic rate tax relief we reclaim on your behalf; and

  • any increase in the value of any defined benefit (sometimes called 'final salary') pension to which you are entitled.

What is tapered annual allowance?

The annual allowance taper took effect from 6th of April 2016.

The objective is to control the cost of pension tax relief and help make sure pensions tax relief is fair and affordable. The way that the tapering works is that for every £2 of income that exceeds £150,000, £1 of annual allowance will be lost. The maximum reduction is £30,000 – it will be reached if you have income of at least £210,000 - resulting in an annual allowance of £10,000. However the tapered annual allowance is applied each tax year separately and you may have a tapered annual allowance in one tax year and a full annual allowance in the following tax year depending on your income.

What if I go over my annual allowance?

You will have to pay a tax charge on anything over your annual allowance, unless you can use up ('carry forward') any left-over annual allowance from up to the three previous tax years.

Can I carry forward left over annual allowance?

You can carry forward left over annual allowance if you were a member of a registered pension scheme in the years you want to carry forward from. You can carry forward unused allowance from the three previous tax years. But even if you use carry forward you can never pay in more than your total earnings in the tax year you are carrying forward to. You can't carry forward unused allowance if you have no earnings or you are on the reduced annual allowance of £4,000.

To what age can I keep paying in?

You can keep paying in to your SIPP up to the age of 75. After that you won't qualify for tax relief. We don't accept payments from anyone over the age of 75.

Can I keep paying in to my SIPP even after I've started taking an income from it?

Yes, as long as:

  • you don't pay in more than £3,600 (gross) in any one year if you don't have any earnings (pension income doesn't count as earnings)

  • if you do have earnings, you stick within your annual allowance. If you have already started taking an income from a pension this is usually £4,000. Ask our Customer Services team if you are not sure which annual allowance applies to you

  • you are not 'recycling' any tax free lump sum you have already taken from a pension. Again, ask our Customer Services team if you are not sure whether this restriction might be relevant for you.

Transferring other pensions to Alliance Trust Savings

Can I transfer a pension from another provider to Alliance Trust Savings?

Yes. You may be able to transfer from another registered pension scheme.

Your current registered pension scheme might charge you for transferring and you should work out the impact of any charges on your investment before going ahead.

You can’t transfer money to us from a private defined benefit scheme unless you have taken advice from a financial adviser with the right qualifications. The only exception is when the total transfer value of all your benefits in that scheme is less than £30,000.

Find out how you could potentially benefit from moving your pensions to Alliance Trust Savings.

Investing through my SIPP

How do I choose where to invest?

We can’t give you advice, but our Investing Hub is packed with research tools, ideas and information to help you when you’re making investment decisions.

What if the fund I want to buy isn’t available?

We regularly review the funds we offer and make changes based on customer demand. So if a fund you’re interested in investing in isn’t available please do let us know the details.

How often will I get valuations and statements?

We send out valuation statements for all our accounts twice a year. We post statements to you unless you ask us to send it to you through our secure service. In that case we email you to let you know when it’s ready to view.

One off the main benefits of managing your account online is that you login and get a valuation at any time, and print if off for your files if you need to.

Accessing my pension savings

When can I access my pension savings?

You can normally access the money in your SIPP from the age of 55 (but set to go up to 57 from 2028).

What are my options?

You can be flexible when it comes to accessing your pension savings.

  • Take all of your savings in one go (typically for very small pension pots)

  • Take smaller lump sums and/or

  • Take a regular income

You are in control and there are no limits to how much you can access at any one time. You can take everything in one go if you like. But only a quarter of your savings can ever be paid tax free. The rest is taxed as income in the tax year (or years) it is paid out to you.

Read our guide to accessing your pension savings.

Get free, impartial guidance on your options:

pension wise

Can I really take all of the money out of my SIPP at once?

Yes you can, but remember you will have to pay tax on all but a quarter of your savings. Depending on your circumstances this could mean a big one-off tax bill that could move you into a higher rate tax band.

Here’s an example.

Mr Miller is 61 years old, he is thinking of taking out the full £125,000 he has saved in his pension. But he already has an income of £31,000 from other sources. He faces a one-off tax bill of £43,500.

Even allowing for a quarter of his pension savings being tax free, he would move into the higher rate tax band. And since his income for the year would be over £124,000, he would also lose all his personal allowance - the amount you can earn before you pay tax.

That is because, under current tax rules, an individual loses a £1 of their personal allowance for every £2 net of tax that they earn above £100,000.

Here are the figures:
Mr Miller’s income
Existing income
Pension fund withdrawal (after 25% tax free cash)
Total income for 2015/16
Mr Miller’s income tax
Personal allowance
20% on £31,785
40% on £92,965
Total income tax bill for 2015/16
What’s more, any more income Mr Miller receives this tax year would be taxed at 40%.

Important information

Please remember the value of your investments and any income from them can go down as well as up. The value of your pension savings may be less than you paid in.

Before you choose a SIPP, make sure you understand its aims and risks. Alliance Trust Savings does not give advice. If you are unsure whether our SIPP is suitable for you, of the risks and commitments of investments and or of how much income to take and when, you should seek professional financial advice specific to your particular circumstances.

Laws and tax rules may change in the future without notice. The information here is our understanding in April 2018. This information takes no account of your personal circumstances which may have an impact on tax treatment.

Alliance Trust Savings Limited is a subsidiary of Alliance Trust PLC and is registered in Scotland No. SC 98767, registered office, PO Box 164, 8 West Marketgait, Dundee DD1 9YP; is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, firm reference number 116115. Alliance Trust Savings gives no financial or investment advice.