If you die, your Self-Invested Personal Pension benefits will be paid to your beneficiaries – either as a lump sum or an ongoing pension. You’ll need to complete a nomination form declaring who you want the payments to go to. The tax treatment of any death benefits paid from your SIPP will depend on your circumstances.
One-time purchase that affects your whole retirement
Due to the current economic climate, it has never been more important to make the correct decisions when deciding how to invest a retirement fund. If you decide an annuity is right for you, it’s important to shop around. It’s a one-time purchase that affects your whole retirement, and you cannot change your mind later on.
Guaranteeing you a regular retirement income for life
An annuity allows you to use your pension fund to buy an income from the provider of your choice. The annuity guarantees regular payments until you die. Normally, once purchased, it cannot be altered. There are different types of annuity available in the market, and you should consider the best product to suit your circumstances.
Helping you make the most of the new pension freedoms rules
Drawdown allows you to take income directly from your pension fund without the need to purchase a lifetime annuity. In turn, this allows your pension fund to remain invested in the assets of your choice whilst taking an income.
Transferring other pensions into a Self-Invested Personal Pension
If you have a UK registered pension scheme with another company, you can transfer its value into your pension fund. However, by transferring benefits from another pension provider into your Self-Invested Personal Pension, you may give up the right to guarantees over the kind of benefits, the amount you will receive and the level of increases that will be applied to your pension in the future.
Maximum total amount that an individual can hold within all their pension funds
There’s also a maximum total amount that an individual can hold within all their pension funds without having to pay extra tax when you withdraw money from them. The lifetime allowance is a limit to the amount you can save in your Self-Invested Personal Pension or other pensions over your lifetime, but excludes your State Pension.
Limiting the amount of contributions you can make each year which attract tax relief
Every year, you receive an allowance for making contributions into a Self-Invested Personal Pension. The Government sets this limit because your pension contributions are topped up with tax relief.
Flexibility over where your money is invested to fit in with your overall investment strategy
Self-Invested Personal Pensions are likely to be most suited to experienced investors who are comfortable choosing and managing investments themselves. You need to have the necessary skills to invest your own pension fund, and you must remember that the value of investments can fluctuate, so you could get back less than you invested.
One of the most tax-efficient ways of saving for retirement
Self-Invested Personal Pensions are one of the most tax-efficient ways of saving for retirement, and you can invest up to the annual allowance for tax relievable pension contributions (currently £40,000). As always, please bear in mind that tax relief will depend on your individual circumstances, and tax laws may change.
