The SIT SIPP also offers control and flexibility when it comes to taking benefits from your pension.
You can commence benefits at any time from the age of 55, whether or not you continue to work.
When you take pension benefits you can receive as a lump sum the lower of either:
- up to 25% of the value of the fund applied to provide your benefits
or
- 25% of your unused lifetime allowance (£1.85m for 2011/12, dropping to £1.5m from 2012/13.)
This lump sum is currently payable tax-free.
The balance of your pension may be used to provide an income either by a drawdown pension, flexible drawdown, or purchasing an annuity.
Drawdown pension
The SIT SIPP allows you to draw an income up to the maximum level set by HMRC from your pension fund which remains invested.
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 SIT SIPP Key Features Document.
Please remember taking income withdrawals may erode the capital value of your pension fund, especially if investment returns are poor and/or a high level of income is taken. This could result in a lower future income than anticipated. It may not be possible for you to maintain income withdrawals which are near, or at, the maximum permitted by HMRC.
Flexible drawdown
The SIT SIPP allows you to draw funds from your SIPP without any annual limits providing you meet certain conditions.
You have the flexibility to withdraw all of the funds from your SIPP in one go, to draw a regular income over and above the drawdown pension limits, or to draw additional funds to suit one-off circumstances.
However, the flexible drawdown option is only available if you are able to meet a Minimum Income Requirement (MIR) of secure retirement income of at least £20,000 a year. Further information is available in The SIT SIPP Key Features Document.