In this section we explain what a SIPP is and broadly how it works. Text in this colour refers to the SimplySIPP.

• What is a SIPP?
• Why choose a SIPP?
• Am I eligible?
• How much can I pay in?
• When and how can I take my retirement benefits?
• What can I invest in?
• What are the charges?
• Do you pay commission?
• Are there any risks?

SIPP stands for self invested personal pension. A SIPP is a flexible type of personal pension that allows you to invest your money in a wide range of assets. It lets you save for retirement in a tax-efficient way, giving you a tax-free cash sum and income benefit options.

A SIPP is a pension arrangement. This means it gets all the favourable tax treatment of a pension arrangement. However, it also means that the benefits you can receive are based on pension rules. This includes rules about the earliest age you can take benefits and limits on what those benefits can be, including the amount that can be taken as tax-free cash.

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In general, a SIPP will suit you if you want to:

• Invest in a wide range of assets
• Make investment decisions about your SIPP assets
• Withdraw an income while continuing to make investment decisions about your remaining SIPP assets
• Make an in specie contribution

A SIPP won’t be suitable if you:

• Don’t need the flexibility a SIPP offers
• Plan to invest only a small amount

A personal pension or a stakeholder pension offers some of the features of a SIPP at lower cost. A SIPP is just one of a wide range of pensions. We cannot advise you as to whether a SIPP is the right type of pension for you. You will need to speak to your own adviser.

If you’re not sure about where to obtain advice, we suggest you contact IFA Promotion Ltd, which is an industry body responsible for promoting independent financial advice in the UK. IFA Promotion Ltd will be able to give you details of a Financial Adviser in your area and whether they have specialist pensions qualifications. Their contact details are: 

• Internet: www.unbiased.co.uk

Further details can be found in the Xafinity SIPP Brochure or you can contact a member of the SIPP team.

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You can join the Xafinity SIPP at any age. You do not need to be working but you do need to be living in the UK.

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For the Xafinity SIPP you can make single and regular payments, transfer money from other pension schemes and make in specie contributions.  The same applies for the SimplySIPP except that this does not accept in specie contributions.

You can contribute as much or as little as you like.  It’s very unlikely that the Xafinity SIPP will be appropriate if you invest less than £25,000.  However, the SimplySIPP may well be appropriate if you have smaller amounts to invest.

You can get tax relief on your SIPP contributions. HMRC and HMT put a limit on the contributions that you can get tax relief for. Tax relief depends on your circumstances and may change in the future.

You can get tax relief on the first £3,600 you pay into your SIPP each year. You may also get tax relief on contributions above this amount. You can only get tax relief on your UK relevant earnings or the annual allowance , whichever is lower. The annual allowance is different for different tax years.

Your employer can also make contributions on your behalf. These contributions are not taxed as a benefit in kind. There is no limit on employer contributions paid on your behalf. However, if the total of your personal and your employer’s contributions is more than the annual allowance, you will need to pay income tax on the difference.

Further details can be found in the Xafinity SIPP Brochure or you can contact a member of the SIPP team.

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You can take benefits from your SIPP any time after age 55. You can use the assets in your Xafinity SIPP to provide some or all of the following benefits.

• Tax-free cash - You can take a tax-free cash lump sum of up to 25% of your fund.
• Annuity - You can buy an annuity from an insurance company.
• Income withdrawal- You can use SIPP assets to provide you with a regular income.

Depending on your SIPP investments, the timing of some of these options may be limited. For example, if your SIPP has invested in commercial property, it may take some time for the property to be sold.

Further details can be found in the Xafinity SIPP Brochure or you can contact a member of the SIPP team.

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You can invest in a very wide range of assets through the Xafinity SIPP. Your contributions (except in specie contributions) are paid into your SIPP's interest-paying bank account. You can then choose which assets to invest in from the wide range listed below.

• Xafinity basic funds. These are very low cost funds that might be suitable for any part of your assets that you do not plan to manage on a day-to-day basis.
• A wide range of equities, investment trusts, unit trusts, funds and shares in OEICs (open-ended investment companies) through the online fund supermarket, Fundsdirect. These investments may be suitable for any part of your assets that you do plan to watch closely.
• Funds and trusts that you ask us to buy direct rather than through Fundsdirect.
• A wide range of quoted shares, gilts (fixed-rate bonds issued and guaranteed by the UK Government) and corporate bonds.
• Bank and building society accounts.
• Commercial property and land, with or without a mortgage.
• Specialised assets such as:
  • Contracts for difference
  • Traded endowment policies
  • Hedge funds
  • Venture capital trusts
  • Unquoted shares
  • Futures and Options  

Investing in specialised assets can involve extra conditions. For example, we may need to investigate some of your planned investments.

For the SimplySIPP, in addition to the main scheme bank account only one investment can be held at a time and this must be one of the following types:

• Bank and Building Society accounts
• Insured policies
• Managed funds (including investment trusts, unit trusts and OEICs)
• Quoted and unquoted stocks and shares

Further details can be found in the Xafinity SIPP Brochure or you can contact a member of the SIPP team.

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The charges we make for setting up and running the SIPP vary depending on the size of the SIPP, how complicated the investments are within it and which type of SIPP you have chosen. We have designed our SIPPs to be extremely competitive. Full details are provided in the SIPP Charges Card appropriate to your chosen SIPP (Xafinity SIPP or SimplySIPP). If you have any queries you can contact a member of the SIPP team.

Depending on the assets you invest in, you may have to pay charges to the people managing those assets.

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We do not pay commission to your adviser. You may, however, agree to pay your adviser from your SIPP. Your adviser will agree with you a fair amount. This payment may be a fixed amount, a percentage of the fund in your SIPP or a percentage of payments into your SIPP.

Some of the investments held by your SIPP may pay commission to:

• Your adviser – if this is the case, your adviser will tell you how much that commission is
• Xafinity – if this is the case, we will tell you how much that commission is

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Before you start a SIPP, you should think about a number of risks and issues, some of which are listed here.

• You must be prepared to manage your SIPP assets. This means regularly making decisions about your investments. We can help you by putting you in touch with investment managers who can do this for you.
• The assets you choose may go up or down in value. We can give you valuations of your SIPP if you ask us, so that you can see how your investments are performing.
• The charges we make for running your SIPP and the charges made by people investing your SIPP’s assets will reduce your investment return. Unless you invest a reasonably large amount, a stakeholder pension or other personal pension is likely to be better for you. You should ask your adviser whether our SIPP will give you value for money.  The Xafinity SIPP caters for those with larger pension assets whilst the SimplySIPP caters for those starting on the road to building a significant pension fund.  Your adviser is the best person to assess which is the most suitable for you.
• A SIPP is a pension arrangement. This means that pensions regulations limit when and how you can take benefits. For example, you can only take a proportion of your fund as tax-free cash, and you have to wait until you reach a minimum age before you can take benefits. If you need more freedom to choose when you use your assets, a pension may not be right for you. You can read a summary of the current cash and retirement rules in our Key Features documents.
• If you invest in an illiquid asset such as property, or investments linked to a property, your ability to take benefits depends on when you can cash in your asset. This may take some time. We can help you by giving you details of the assets you hold, and give you retirement forecasts (estimates of how much your pension will be) and information when you ask for it. However, we can’t guarantee when you will be able to sell your assets.
• The estimated value of assets (such as property) before you sell them will only be based on opinions (for example, a valuer's opinion). When you sell, you may get less than you expect.
• If you transfer money from another pension scheme into your SIPP, you may lose some benefits. (For example, the other scheme may give you guarantees that you lose when you transfer – for example, some schemes may give a guarantee that the fund value will not fall.) We will not take transfers from other pension schemes unless you have had financial advice. There is a lot to consider when you are deciding whether pension transfers are appropriate for you. Because of this, you should get professional advice.

Our brochure also gives you information about the risks relating to income withdrawal.

Talk to your adviser about how much risk you are willing to take with your investments before you decide whether to invest in a Xafinity SIPP.

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