Self-Invested Personal Pensions (SIPPs)

Anyone can become a member of a UK-registered pension scheme, regardless of where they are resident. However, tax relief on contributions into the pension scheme may or may not be available, depending on a member’s personal circumstances and residence status.

To receive tax relief on contributions made to a UK-registered pension scheme, the member must be a ‘Relevant UK Individual’ – please click here for more information

The UK annual allowance is set at £40,000 for the 2021/22 tax year. This may be lower if the individual has already flexibly accessed pension benefits or has annual income more than £240,000. Where contributions are made in excess of the annual allowance, a tax charge will fall due.

An individual who is a member of a registered pension scheme and is no longer resident in the UK is a ‘relevant UK individual’ for a tax year if he/she was resident in the UK:

• At some time during the previous five UK tax years
• When he/she became a member of the pension scheme.

Such individuals may qualify for tax relief on contributions up to the ‘basic amount’ of £3,600.

No, the annual allowance only applies to new savings and not to the transfer of existing pension arrangements.

Yes, a SIPP can receive transfers from both UK-registered pension schemes and overseas pension schemes, including Qualifying Recognised Overseas Pension Schemes (QROPS). The overseas pension scheme will need to confirm that it is willing to grant the transfer.

Yes, it is possible to consolidate multiple pensions within a SIPP.

A SIPP allows a broad scope of investments, subject to the provider’s discretion. Depending on the type of SIPP purchased, permitted investments may include collective investment funds, equities, corporate and government bonds, cash deposits and UK commercial property. The trustee will need to be satisfied that the investments are sufficiently liquid and are commensurate with the member’s attitude to risk.

As the Trustee of your SIPP, Sovereign is responsible for investment governance arrangements of your scheme, including determining an appropriate investment strategy and ensuring that it adheres to the investment provisions of your scheme’s governing documents.

Your investment strategy, setting out how the assets are to be invested, is one of the most important drivers of your scheme’s ability to meet its fundamental objective of providing pension benefits as they fall due over the life of the scheme. You need to take an appropriate amount of investment risk to seek the return needed, to understand the overall level of investment risk in your scheme and to manage that risk effectively.

Each member must nominate an Investment Adviser and/or Investment Manager who can make investment recommendations to the trustee. The trustee will take account of the investment objective and purpose of the scheme and ensure compliance with any applicable investment restrictions as imposed by law and the risk profile of the member.

As trustee, our investment proposition is to provide our clients with investment options from our researched list of Investment Providers, which we monitor on an ongoing basis to ensure they remain appropriate for our clients. We will also monitor the costs involved with the management of your scheme assets to ensure that they continue to represent good value.

The earliest age at which SIPP benefits may be accessed is 55.

The SIPP offers a Pension Commencement Lump Sum (PCLS) of up to 25% of the value of the pension fund, subject to the available Lifetime Allowance. The balance of the fund can be drawn flexibly in line with the UK’s ‘flexible benefits’ regime.

The 25% PCLS is not subject to UK income tax but any payments over and above this will be subject to tax at the recipient’s marginal rate of UK income tax. If the pension scheme member lives overseas, he/she may be entitled to apply to receive their pension income free of UK tax and instead pay tax in their country of residence. This would be subject to a successful application for relief where a suitable double taxation agreement exists between the member’s country of residence and the UK.

Yes. We always recommend that individuals should seek appropriate advice in respect of the management of an existing pension arrangement or a pension transfer.

Sovereign Pension Services aims to provide the highest possible standard of service, but we appreciate that situations sometimes occur where we do not meet a client’s expectations.

If you have a complaint that relates to any Sovereign retirement planning product or service, we encourage clients to contact the Sovereign office that provides their administration services (as shown on your documentation) in the first instance, so we can try to put things right. Our colleagues will do all they can to resolve any problems and ensure that you receive a quick and fair response to any complaints you may have.

If you wish to express dissatisfaction or make a complaint about any aspect of our service, you can further contact Sovereign Pension Services:

• By phone at +44 (0)151 328 1777
• By email to Compliance Director Barbara Howard at bhoward@SovereignGroup.com
• By post to Sovereign Pension Services (UK) Limited, Sovereign House, Port Causeway, Bromborough, Wirral, CH62 4TP, UK.

We have a complaint handling procedure in place that is designed to ensure that each complaint is dealt with fairly and to your satisfaction. Our procedures meet the standard set by the Financial Conduct Authority (FCA). The FCA has published guidance on how to make a complaint. Copies can be downloaded from the FCA website, or you can contact the FCA on + 44 (0)800 111 6768.

Please click here to find out more about our Complaints Procedure.