Frequently asked questions

Below, are some of the most frequently asked questions about Self Invested Personal Pensions that will help you decide whether a SIPP is right for you.

  • A Self Invested Personal Pension (SIPP) is a retirement savings account for investors who want to manage their pension investments themselves. With a SIPP, you're in control of when and how your money is invested.  You also decide how you take the benefits, as long as you stay within HMRC rules.

  • Our SIPP could be right for you if you:

    • are looking to build up a Pension Fund in a tax-efficient way
    • understand the value of your investments can fall as well as rise
    • are prepared to commit to having your money tied up, normally until at least age 55
    • need to use the 3 year carry forward facility.

    Willis Owen Limited offers an execution-only service. If you are in doubt about the suitability of our SIPP, we suggest you seek advice from a suitably qualified Independent Financial Adviser.

  • You can have a SIPP with us if you are a resident in the UK and aged 18 or over.

  • You are free to contribute as much as you like subject to HMRC limits. We allow you to start, stop or restart contributions whenever you want to, without penalty.

    Single contributions can only be paid by debit card. Regular contributions can be paid by Direct Debit; payments are collected a date of your choosing between 1st and 28th of the month.

    Personal payments that qualify for tax relief can be paid into your SIPP. This means you can normally pay up to £3,600 a year into your SIPP regardless of your employment status, as long as you are a relevant UK individual.

    If you have UK earnings chargeable to income tax you can contribute up to 100% of these earnings (up to £40,000 for the tax year 2018/19), but this figure is reduced if you have an income greater than £150,000 per annum.

    You can build up a total Pension Fund from all registered pension schemes up to the standard Lifetime Allowance. For 2018/19 the Lifetime Allowance is set at £1.03 million. See the section on Lifetime Allowance below.

    Note: You should also be aware of the content of the Key Features or Key Investor Information Document that may be issued by the product provider of any underlying investment.

  • The minimum contributions are as follows:

    • the minimum single contribution is £25
    • the minimum regular contribution is £25
  • If you have a registered pension scheme with another company and these are defined contribution schemes, you can transfer its value into your SIPP.

    By transferring benefits from another pension provider into your SIPP, 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.

    Your existing pension provider may apply a penalty, or other reduction in the value of your benefits, if it is transferred. There is no guarantee that you will be able to match the benefits that you give up by transferring your pension to us.

    Your pension provider should be able to tell you if you will lose any benefits and if penalty charges are applicable.

    Defined Benefit schemes
    Please note that we will not accept transfers from final salary pension schemes.

  • Yes. If you wish to request a transfer into : invest, you can simply initiate this online and then download the transfer form from the 'my documents' area. Complete and return this form and we will contact the provider of your existing SIPP to arrange the transfer.

  • The pension administrator (Embark) will claim any basic rate tax relief you are entitled to from HMRC. All personal contributions (whether you are employed or self-employed) are payable net of basic rate tax (20% for 2018/19).

    As an example, if you contribute £80 into your SIPP, £20 tax relief will be credited to your SIPP and you will be able to invest this straight away.

    If you are a higher rate tax payer you can normally claim additional tax relief via your tax return.

    Please note that tax relief is not available when you reach 75.

  • Growth in the value of your SIPP is free from UK Capital Gains Tax and UK Income Tax. Any dividends received will not count towards your annual Dividend Allowance and any interest received will not count towards your Personal Savings Allowance. When you retire and take an income from your SIPP this will be taxed at your marginal rate of tax.

  • The Government has set the standard Lifetime Allowance as follows:

    • 2018/19 - £1.03 million
    • It may change in future years, but this is not guaranteed.

    Each time new pension benefits commence (also known as crystallisation) a portion of your Lifetime Allowance is used up. Once you have used up your Lifetime Allowance, any pension benefits paid above the allowance will be subject to the Lifetime Allowance charge. If excess funds are used to provide a taxable pension, the Lifetime Allowance charge is 25% of the income taken on the portion of the Fund above the Lifetime Allowance. This is in addition to Income Tax payable at your marginal rate. Alternatively, if excess funds are paid as a lump sum, called a Lifetime Allowance Excess Lump Sum, the Lifetime Allowance Charge is 55%. Embark will deduct this tax charge from your Fund and pay it to HMRC before paying your benefits.

    If you’ve built up substantial pension savings before 6 April 2006 and have registered for enhanced and/or primary protection (transitional protection) with HMRC then this may reduce, or eliminate, any Lifetime Allowance Charge that would otherwise be payable.

    Willis Owen Limited offers an execution-only service. If you require advice regarding your pension, you should contact a suitably qualified Independent Financial Adviser.

  • You can choose to invest in a range of investment such as Funds, Shares, Investment Trust and ETFs subject to HMRC permitted investment regulations.

  • No. The size of your pension will depend on the size of your SIPP Fund when you reach retirement; this depends upon how much you have put into your SIPP and how long it has had to grow. It also depends upon the potential investment growth achieved. 

    • Benefits can currently be drawn from a SIPP from the age of 55 years. The Government has proposed that this will change to 57 in 2028, along with the rise in the state pension age to 67 years, though the legislation still has to be passed.
    • The intention is that the minimum drawdown age will in future be 10 years below the state pension age which will increase in line with rises in life expectancy.
    • You may start taking a pension income before age 55 only if you are forced to take early retirement through ill-health or you have a protected pension age.

    Willis Owen Limited offers an execution-only service. If you have any doubts about when and how to take your pension, we recommend that you take advice from a suitably qualified Independent Financial Adviser.

    • Take a pension commencement lump sum and /or a regular pension income even if you are still working. You can draw up to 25% of the value of your SIPP tax-free and then a regular income from the remainder which is subject to tax at your marginal rate.
    • You can take your income via drawdown (where you draw directly from the Pension Fund, which remains invested and is known as a flexi access drawdown) or via an annuity (where you receive a secure income for life)
    • Take your whole pension pot as cash in one go with 25% tax-free and the rest taxed as income
    • Take lump sums, as and when required, with 25% of each withdrawal tax-free and the rest taxed as income
    • A combination of the options.

    Willis Owen Limited offers an execution-only service. If you have any doubts about when and how to take your pension, we recommend that you take advice from a suitably qualified Independent Financial Adviser.

  • 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.

    There is no upper age limit on how long you may stay in drawdown but death benefits will change when you reach age 75 if you have not withdrawn all of your benefits by this point.

    Drawdown can cease at any time and the residual Fund can be used to purchase a lifetime annuity using the open market option.

    Any income you receive from the SIPP (or an annuity) will be subject to PAYE income tax.

  • 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.

    You may take up to 25% of the Pension Fund as a tax free cash sum in return for a lower pension income. Some people may be eligible for a higher tax free cash sum.

    You can choose to purchase a lifetime annuity with your Drawdown Fund at any time.

    Willis Owen Limited offers an execution-only service. If you have any doubts about when and how to take your pension, we recommend that you take advice from a suitably qualified Independent Financial Adviser.

  • Upon receipt of a death certificate, the investments held under your SIPP will be realised and their full cash value used to provide benefits for your spouse/civil partner, dependants, family members or other beneficiaries nominated by you for this purpose.

    The Scheme Trustees will decide who will receive benefits and the form of the benefits, in their absolute discretion. However, they will take into account any wishes you have expressed through the completion of a death benefit expression of wish. You may complete a new nomination at any time.

    A beneficiary can usually elect to receive their benefit as a lump sum or a Flexi-access Dependant’s pension. Alternatively they may be able to use it to purchase a Dependant’s annuity with an Insurance Company of their choosing.

    Payments of death benefits are normally free of any income or inheritance tax but we cannot guarantee that this will be the case. You should consult your adviser if you are unsure.

    Any amount of the Fund over your personal Lifetime Allowance may be subject to a tax charge. This will be determined by your personal representatives.

    If a beneficiary dies whilst still in receipt of the death benefits you bequeathed them then the remaining benefits will be paid to a successor. The successor or successors will be selected by the Scheme Trustees in their absolute discretion and can be anyone appointed by the beneficiary or selected by the Scheme Trustees in light of the beneficiary’s personal circumstances.

  • If you die after age 75 then the process is the same as described above, however, a tax charge will be levied upon payment of the benefits.

    Payments will be taxed in accordance with PAYE based on the recipient’s marginal rate.

    If you do not leave a surviving spouse/civil partner or dependants then the value of your Fund may be paid to a charity nominated by you for this purpose. Any funds paid to a charity will be exempt from tax.

    If you die after the age of 75 any subsequent payment of death benefits are not subject to the Lifetime Allowance.

  • You can transfer the value of your SIPP to another UK registered pension scheme at any time.

    If you have started taking benefits from your SIPP, then you must transfer the whole of that part of your Fund from which you are drawing benefits to your new scheme. If you have uncrystallised Funds (i.e. no benefits have commenced) you can choose to transfer all, or only a part, of those uncrystallised Funds to another pension scheme.

    The transfer can be in the form of a cash payment, in which case you will have to sell all of the investments held under your SIPP before the transfer is completed, or you may be able to transfer them in their existing form (known as an “in-specie transfer”).

  • You may change your mind about having a Willis Owen SIPP. You have the right to cancel within 30 days from when we issue your Confirmation Schedule.

    If you have invested in assets during this period, you will need to sell the relevant holdings. Where there has been a fall in the market, you will receive back the original investment less any shortfall. Where a profit has been made, you will receive back the original investment plus any profits made.

    Cancellation rights will also apply to any additional transfers.

    Please note that it may not be possible to return the funds received from a transfer in to the original pension arrangement should you cancel the transfer within the cancellation period. In this instance you will need to arrange for another pension arrangement to accept the transfer.

    If you opt to enter into drawdown you will also receive a separate cancellation notice for this. This gives you the right to cancel the chosen option during the next 30 days. You will need to return any pension commencement lump sum and income paid to you.

  • No, we are not authorised to provide any advice on tax or financial services related matters.

    If you need any advice you must contact a suitably qualified Independent Financial Adviser. Your adviser will give you details about the cost of advice.

  • A beneficiary is a person, Trust or Charity that you would like to pass your pension on to in the event of your death.

    Please note that you can only pass your pension on to a Charity if you have no dependants. 

  • This is the form you use to let the scheme trustees know who you want your pension to be passed on to in the event of your death. Although this form is not legally binding, the pension trustees will take into consideration what you have expressed. 

  • Yes. You can amend this form at any time. If you have less than 4 beneficiaries (an individual or an organisation) you can amend their details online. This can be found within 'my sipp details'.

    If you would like to have more than 4 beneficiaries, you will need to complete a paper form to print, complete and sign. This can be found in your document library within : invest

  • Yes. You can amend the expression of wish (up to four beneficiaries) anytime online. This is found within 'my sipp details' and you will need to select the beneficiary type as 'organisation'. 

  • Scamming methods are becoming more sophiscated, if you think you have come across a pension scam, you should contact the Pensions Advisory Service (TPAS) on 0300 123 1047.

    Some classic signs of a scam includes:

    • cold calling about a free pension review
    • you are pressurised to make a decision due to the "limited offer"
    • the contact details given are a mobile phone and a PO box address
    • they are reluctant for you to call them back
  • 6 months before your selected retirement age, we will send you a wake up pack. This will usually include your benefits statement, your retirement options, a pension guide from Money Advice Service and information about Pension Wise.

    Once you have decided what you would like to do, you can download the 'benefit options form' from your document library and send the completed form back to us. We will then process your instructions.

For further information you may find these external websites useful:

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