Features and Benefits
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WHY CAN HAVE A SIT SIPP?
If you are resident in the UK, Jersey, Guernsey or the Isle of Man or are a Crown employee serving overseas you can open a SIT SIPP. You can open a SIT SIPP regardless of your employment status or whether you are already an active member of an employer's pension scheme or are contributing to other pension plans. You can take out a SIT SIPP if you are:
- employed;
- self employed;
- a pensioner;
- a carer;
- in full time education; or
- unemployed.
Please note that in order to pay contributions into a SIT SIPP you must be resident in the UK for tax purposes.
Spouses, partners and children
Your spouse or partner, children or grandchildren could have a SIT SIPP and, even if they are not earning, take advantage of tax relief on contributions of up to £3,600 each tax year.
Contributions into their SIT SIPP can build into a fund that could give them valuable additional income in retirement.
If you would like to know more about applying for a SIT SIPP on behalf of an applicant who is under the age of 18 or a non-earning spouse or partner, please see the Key Features of The SIT SIPP.
What are the tax benefits of The SIT SIPP?
WHAT ARE THE TAX BENEFITS OF THE SIT SIPP?
As with any pension scheme registered with HM Revenue & Customs (HMRC), The SIT SIPP gives you:
- tax relief on your personal contributions up to current HMRC limits, and
- the option to take a tax-free lump sum of up to 25% of the value of your pension fund or 25% of your unused lifetime allowance (whichever is the lower) when you take your pension benefits.
Please remember that taxation laws and the levels of and relief from taxation may change. The favourable tax treatment of SIPPs may not continue in the future. Any change in your tax status, to taxation legislation, or to HMRC practice in the UK relating to pensions or generally, could affect the levels of and relief from taxation available to you. If you are in any doubt as to your tax position, you should consult your professional adviser prior to making any decision to establish a SIPP.
Contributions
CONTRIBUTIONS
You can make lump sum and/or regular monthly contributions, including direct contributions from your employer.
Lump sums may be made by cheque or by electronic transfer, monthly contributions are made by Direct Debit. You may also be able to transfer existing pension arrangements already built up elsewhere.
You can increase or decrease the amount you contribute each month subject to the minimum levels, and you can stop or restart monthly contributions at any time. However if you cease contributing to The SIT SIPP this could have a detrimental effect on the value of your pension at your chosen retirement date.
Contribution levels
CONTRIBUTION LEVELS
Minimum (gross contributions)
The minimum lump sum contribution is £1,000.
Maximum (gross contributions)
The SIT SIPP accepts contributions up to the limit for tax relief. This is the higher of either the basic amount (£3,600 for the 2008/2009 tax year); or 100% of your relevant UK earnings in that tax year.
Basic level contributions
You can make gross contributions of up to £3,600 each tax year and receive basic-rate tax relief (currently 20%), regardless of whether you have taxable earnings. This makes the actual cost to you just £2,880. The scheme administrator claims £720 from HMRC on your behalf and pays this into your SIT SIPP on receipt.
If you are a higher-rate taxpayer you can claim further tax relief through your self-assessment tax return.
Larger contributions
If you wish to make gross contributions of more than £3,600 in any tax year, the maximum contribution on which tax relief is available will be 100% of your relevant UK earnings.
If total contributions on which tax relief has been obtained, together with any employer contributions and benefit accruals, exceed the annual allowance of £235,000 (for tax year 2008/ 2009, increasing to £255,000 by tax year 2010/2011), you are likely to be subject to the annual allowance charge. For more information, please see the Key Features of The SIT SIPP.
Pension contributions by your employer
If you are employed, your employer can also make gross contributions into your SIT SIPP.
Contributing for partners and children
Most people under the age of 75 who live in the UK are eligible for a SIT SIPP. This means that your spouse or partner, children or grandchildren could have a SIT SIPP and, even if they are not earning, take advantage of tax relief on contributions of up to £3,600 each tax year.
Transferring existing pension benefits to The SIT SIPP
TRANSFERRING EXISTING PENSION BENEFITS TO THE SIT SIPP
The SIT SIPP accepts transfers in from existing UK registered pension schemes and certain investments from other self-invested personal pensions (subject to legislative and administrative restrictions).
Transferring to The SIT SIPP allows you to consolidate your existing pension funds into one scheme and benefit from the control and flexibility The SIT SIPP offers. It could also help you to take benefits and income in a way that most suits your circumstances.
Not all transfers into The SIT SIPP may be suitable. By transferring other pension benefits into The SIT SIPP you may be giving up the right to guarantees in the form of benefits, the amount you will receive and also the level of increases that will be applied to your pension in the future. You should seek professional advice from a suitably qualified financial adviser if you are considering transferring existing pension benefits into a SIT SIPP.
Investment
INVESTMENT
You can make planned investments on a monthly or one-off basis and/or you can make investments on a real time basis – where instructions received during market hours will be carried out as soon as reasonably practicable.
The minimum that can be invested at any one time through a planned or real time investment is £20.
Your contribution and investment options
Please remember that dealing charges apply to all transactions. The overall impact of these charges on small investments will be much higher in percentage terms than on larger regular or lump sum investments.
Investment choice
INVESTMENT CHOICE
The SIT SIPP is about control and flexibility. It allows you to choose when, how much and where to invest according to your circumstances and requirements. You can choose from the comprehensive range of investments listed below.
- Equities listed on the FTSE 100, 250 and FTSE All-Share
- Shares in Investment Trusts
- Exchange Traded Funds also known as Tracker Shares
- Units in a wide range of authorised UK unit trusts
- Shares in UK Open Ended Investment Companies (OEICs)
- Gilts
- Corporate fixed and convertible bonds
- CREST Depositary Interests (CDIs)
- Alternative Investment Market stocks (AIM)
- Warrants in UK shares settled in CREST
- UK convertible and cumulative preference stock
- International equities listed in New York (AMEX, NASDAQ, NYSE), Frankfurt, (XETRA), Milan (MTA), Paris (Euronext), Amsterdam (Euronext) and Brussels (Euronext)
Included in the list of allowable investments are stock units in The Scottish Investment Trust PLC (SIT). As a global growth investment trust, SIT could provide the ideal core of your pension portfolio.
Please note the investments in The SIT SIPP are offered on an execution only basis and without pensions advice. The inclusion of an investment vehicle in the range of investments eligible for The SIT SIPP does not constitute a recommendation to purchase that investment. The responsibility for the choice of any investment and the management of your SIPP portfolio lies solely with you. Increased investment choice also brings increased complexity, and active management and investment expertise are needed for a SIPP. If you do not have the time to manage your SIPP on an active basis or if you are not sufficiently knowledgeable to understand the risks associated with investment you should seek assistance and advice from a suitably qualified professional.
Taking benefits
TAKING BENEFITS
The SIT SIPP also offers control and flexibility when it comes to taking pension benefits.
You can take a pension at any time from the age of 50. This will rise to the age of 55 from April 2010. You must start taking benefits from your entire pension fund by your 75th birthday although currently you are not required to buy an annuity.
Tax-free lump sum
When you take pension benefits prior to age 75, you can receive up to 25% of the value of your pension fund or 25% of your unused lifetime allowance (£1.65m for 2008/09), whichever is the lower, as a lump sum (currently up to a maximum of £412,500). This lump sum is currently payable tax-free.
The balance may be used to provide an income either by purchasing an annuity or through income withdrawn directly from your fund.
Income withdrawal
The SIT SIPP allows you to draw an income up to the maximum level set by HMRC.
You can choose to take a regular income and/or one-off pension payments to suit your individual circumstances. Further information is available in the Key Features of The SIT SIPP.
Please remember taking income withdrawals may erode the capital value of your pension fund, especially if investment returns are poor and a high level of income is taken; this could result in a lower income than anticipated in the future. If income withdrawals near, or at, the maximum permitted by HMRC are taken, such income withdrawals may not be sustainable.
Charges
CHARGES
The SIT SIPP charges are transparent with the combination of a flat rate annual charge and transaction charges. The key charges are set out below.
Initial plan charge
There is no initial or set up plan charge. Administrative and transaction charges are as below.
Quarterly administration charge
£18.75 + VAT each quarter for portfolios valued at less than £50,000.
£37.50 + VAT each quarter for portfolios valued at £50,000 and over.
Transaction charges
You can contribute monthly by Direct Debit or with a lump sum by cheque or electronic transfer. You can invest through monthly and/or one-off planned trades, and/or you can invest on a real time basis. You can contribute and invest by using any combination of these options.
There is no transaction charge for SIT stock purchased through a monthly or one-off planned investment. For all other monthly or one-off planned investments there is a charge of £1.50 per trade. Please note that the charges below are per trade.
Please note if you buy SIT or other UK stock on a real time basis the transaction charge is £11.95.
Please remember with purchases of any UK equities, including shares and stock units of investment trusts, there is mandatory government stamp duty (currently 0.5%) on the amount invested. Also, there is a PTM (Panel on Takeovers and Mergers) levy of £1.00 for all deals in UK quoted shares over £10,000. With purchases of certain international equities there may be additional stamp duty charges in other jurisdictions on the amount invested. Purchases and sales of some investments such as SIT stock may be subject to a dealing spread (the difference between the buying and selling prices).
Transfer In
There is a transfer in charge of £50 + VAT per transfer in from another UK registered pension scheme (maximum £300 + VAT per SIPP over the lifetime of your SIT SIPP).
Transfer Out
There is a transfer out charge of £75 + VAT for The SIT SIPP plus £15 per investment transferred out.
For full details of charges please click here. Please note that charges for The SIT SIPP may be higher than for a stakeholder plan.
How to apply
HOW TO APPLY
It's simple to apply. Please make sure that you read and retain the following important documents, paying particular attention to the charges and the risk factors. We would recommend that you print these out for future reference.
You then complete the application form – please click here to download.
Please return your completed and signed application form, along with any documents that are requested, to:
Freepost RRKC-GYRA-TEKU
The Halifax Share Dealing SIPP Administration Team
A J Bell Management Limited
Trafford House
Chester Road
Manchester
M32 0RS
Tel: 08457 22 55 25
You have a legal right to cancel your SIPP within 30 days if you change your mind. Further information on your right to cancel your SIPP can be found in the Key Features of The SIT SIPP.
Setting up your SIT SIPP
SETTING UP YOUR SIT SIPP
The SIT SIPP Administrator, A J Bell Management Limited, will, upon receipt of funds, a valid application form and verification of identity, set up your SIT SIPP. A J Bell Management Limited will issue a welcome letter to confirm the opening of your SIT SIPP and send the funds and SIPP details to the dealing and stockbroking services administrator, Halifax Share Dealing Limited (HSDL). HSDL will issue a welcome pack to confirm your dealing account.
- Lump sum contributions are made by cheque or electronic transfer. Please note that HSDL will only invest with cleared funds
- Regular monthly contributions are made by Direct Debit, an instruction for which can be found in The SIT SIPP application pack.
- Where an employer intends to pay regular contributions by Direct Debit, the first payment must be made by cheque drawn on a UK bank or building society account in the employer's name.
- If the initial contribution sent with your application form is by cheque, you will normally be able to deal approximately 5 days after its receipt by A J Bell Management Limited.
- If you are transferring in pension benefits from other schemes, it may take some time for A J Bell Management Limited and HSDL to receive the transfer payment from your existing provider. If a transfer payment is to be paid into your SIT SIPP there is no requirement to pay contributions.
Investment Plan
Once your SIPP is open, you can set up an investment plan on www.halifax.co.uk/online to instruct HSDL to buy certain shares for you every month into your SIT SIPP. There are four investment dates each month and you can choose to set up a monthly or a pre-planned once only investment. You can add or remove investments from your investment plan online at any time. You can also suspend or reactivate your investment plan online at any time.
Additional contributions
ADDITIONAL CONTRIBUTIONS
Lump sum
Once your SIPP has been opened, further lump sum contributions (minimum £1,000 gross) can be made by completing the Additional Contribution Form and sending it with a cheque, made payable to Sippdeal Trustees Limited re (your name), to A J Bell Management Limited. You can also make lump sum contributions by electronic transfer. A J Bell Management Limited will process your contribution and send it to HSDL who will then add the amount to your dealing account. If you have not set up an investment plan, HSDL will inform you either in writing or by email.
Regular
You can arrange to increase or decrease your regular contributions at any time.
Keeping you informed / How to monitor the progress of your SIT SIPP
KEEPING YOU INFORMED/HOW TO MONITOR THE PROGRESS OF YOUR SIT SIPP
Once your SIT SIPP is active you will receive a transaction statement and valuation every six months in October and May. You will also receive contract notes for every investment transaction.
In addition you can register to access up-to-date valuations and transaction information online by clicking here.
- The SIT SIPP is marketed and promoted by SIT's wholly owned subsidiary, SIT Savings Limited, which is authorised and regulated by the Financial Services Authority.
- The SIT SIPP is administered by A J Bell Management Limited, part of the A J Bell Group, one of the UK's leading specialists in trustee and administration services for SIPPs.
- The trustee of The SIT SIPP is Sippdeal Trustees Limited, a wholly-owned subsidiary of A J Bell Management Limited.
- Dealing and stockbroking administration services are provided by Halifax Share Dealing Limited (HSDL).
Further information
FURTHER INFORMATION
Administration of your SIT SIPP
The SIT SIPP is administered by A J Bell Management Limited. If you have specific questions about the administration of your SIT SIPP or any other pension related enquiries, please phone A J Bell Management Limited on 08457 22 55 25 or contact your adviser.
The SIT SIPP
Halifax Share Dealing SIPP Administration Team
A J Bell Management Limited
Trafford House
Chester Road
Manchester
M32 0RS
Dealing and investment into your SIT SIPP
All investment is undertaken by Halifax Share Dealing Ltd (HSDL). If you have any queries relating to dealing and investment in your SIT SIPP, please contact HSDL on 08457 22 55 25.
The SIT SIPP (HSDL Administration Team)
Halifax Share Dealing Limited
Trinity Road
Halifax
West Yorkshire
HX1 2RG.
The Scottish Investment Trust PLC (SIT)
If you have any questions about The Scottish Investment Trust, please do not hesitate to contact SIT.
Please note SIT cannot give you any information or advice on pensions in general nor on your SIT SIPP investment in particular.
SIT Savings Limited
Investor Services
FREEPOST EH882
6 Albyn Place
EDINBURGH
EH2 OBR
Telephone: 0131 225 7781
E-mail: heather@sit.co.uk
Website: www.sit.co.uk
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