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Managing your SIPP
We’re here to give you the confidence to manage your own SIPP, supporting you today, and when you’re approaching retirement.
The basics
- With a SIPP, you have complete control and flexibility to make your own investment decisions.
- Easily manage your SIPP, by logging on to check or change your investments at any time through Internet Banking or the Mobile app.
- Transfer in old pensions, top up, or start accessing your pension benefits from age 55 (57 from 2028).
- The maximum amount you can currently contribute across all your pensions, and benefit from tax relief, is £60,000 per tax year (or 100% of your earnings, if you earn less than this). This limit is known as your Annual Allowance.
Next steps
It’s never too early to plan for retirement, here’s some steps to get you started.
Interest rates
The Self-Invested Personal Pension (SIPP) will pay interest on any cash balance of £1 or above held in your account. Interest is calculated daily and paid gross yearly in March. The interest rate payable on our SIPP is variable at 3.55%.
Current interest paid
|
Start date |
Customer Rate |
Interest Retained |
|---|---|---|
|
Start date 18/11/2024 |
Customer Rate 3.55% |
Interest Retained 0.80% to 1.30% |
All cash is held in a central client money account. Money is held in line with Financial Conduct Authority (FCA) rules and is protected under the Financial Services Compensation Scheme (FSCS). We receive interest on this central account from our banking partners. The interest rates vary depending on the total balance held across all accounts, and market interest rates. Some of this interest is passed to our SIPP customers. Any interest that we retain is to develop products and services.
Tax Relief
If you’re under the age of 75, and eligible to receive tax relief, any personal contributions paid into your SIPP receive immediate tax relief at the basic rate. For2024/2025 this amount is 20%.
For example: If you pay in a £8,000 personal lump sum into your SIPP, HMRC will top it up with an extra £2,000, making a total contribution of £10,000.
If you pay a higher rate of income tax, you can usually claim extra tax relief on your personal contributions directly from HMRC as part of your annual tax return. We do not add this additional relief to your SIPP.
You can see all contributions paid into your SIPP (inc. the amount of tax relief applied) in your account online, or through the app in the ‘Manage my SIPP’ section. Cash will be available to invest in your account within three working days.
What happens when you die?
When you die, your SIPP (Self-Invested Personal Pension) can be passed to your beneficiaries, usually free from Inheritance Tax.
Your beneficiaries can choose to receive their benefits in one of the following ways:
- as a cash lump sum
- as a guaranteed yearly income, by buying an annuity from an annuity provider, or
- as a flexible income, by setting up a beneficiary drawdown.
Death benefit cash lump sums are normally not subject to Inheritance Tax.
An annuity will normally pay a regular, secure income for the rest of their life.
Drawdown allows them to keep the pension invested and withdraw an income as and when they like. With drawdown they’ll also be able to pass on anything that’s left to future generations when they die.
Some of these benefits may be taxed but this will depend on what you’ve done with your pension and your circumstances at the time of your death.
If you die before age 75
Cash lump sum and income death benefits will normally be paid tax free.
This is on the condition the payment occurs within two years of notification of death, and it’s within your Lump Sum Death Benefits Allowance (LSDBA).
For 2024/25 this limit is £1,073,100. The LSDBA will be reduced by Relevant Benefit Crystallisation Events (RBCEs) – effectively, withdrawals already taken from your pension before your death.
Death benefits paid as a flexible income through a beneficiary drawdown are not subject to the LSDBA.
If you die after age 75
Benefits will be subject to tax at the marginal tax rate. The tax impact will vary depending on how your beneficiary chooses to access their benefits.
For example: You die after age 75 and nominate one beneficiary. Your beneficiary might decide to take their benefits as income over a period time instead of a lump sum. For example, if they earn £30,000 a year and inherit £50,000, they can withdraw £10,000 per year, taxed at 20%. This is instead of taking the whole amount as a lump sum, which could be taxed more heavily.
Remember...
Pension and tax rules can change, and any benefits will depend on individual circumstances.
You can nominate as many beneficiaries as you like, such as a spouse and a child, or a charity. Who you choose is up to you but it’s always worth regularly reviewing, especially as your life and circumstances change.
Adding or changing your SIPP beneficiaries is easy. You can do this in your account online, or through the app in the ‘Manage my SIPP’ section.
Leave it invested
Leave your SIPP invested in the way you want to, for however long you want.
Flexibility through drawdown
(Flexi-access drawdown)
Take a one-off lump sum of up to 25% tax-free, and then have the freedom to choose how and when you take out the rest of your money.
Take a taxable lump sum
(also known as an Uncrystallised Funds Pension Lump Sum (UFPLS))
Withdraw as much or as little as you like as a lump sum, with 25% of each withdrawal tax-free.
Buy an annuity
Access a lump sum up of to 25% tax-free and use the rest to buy a guaranteed regular income for life (we don’t offer an annuity, but you can transfer to an annuity provider to take your benefits this way).
Things to consider:
Lump sum allowance:
HMRC applies a limit to the lump sum(s) you can take tax-free. This is called the Lump Sum Allowance (LSA). For 2024/25, this limit is £268,275. Your tax-free Pension Commencement Lump Sum (PCLS) is limited to 25% of your pension value, up to a maximum of the LSA (unless you have existing pension protections in place).
Money Purchase Annual Allowance:
The Money Purchase Annual Allowance (MPAA) limit applies once you start taking income from your SIPP – this could be a withdrawal from your flexi-access drawdown or taking a taxable lump sum (UFPLS). The MPAA limits impacts the amount you can pay into your SIPP in the future without incurring a tax charge. This limit is currently £10,000 each tax year (although the Government may change this in future).
Please see our Retirement guide (PDF, 304KB) for more information.
We're all part of Lloyds Banking Group which incorporates many well-known companies including Lloyds, Scottish Widows, Halifax Share Dealing Ltd and Embark Investment Services Ltd. Our retirement partner for this SIPP is Scottish Widows, who have more than 200 years' experience in pensions and retirement.
Understanding the risks
The main goal of any pension scheme is to provide you with an income during retirement. There are some important things to think about that could affect the benefits you’re able to receive in the future.
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Before transferring benefits into your SIPP from another pension provider, you should check you aren’t giving up valuable feature or benefits.
Although we don’t charge you, your existing pension provider may apply a penalty, or other reduction in the value of your benefits, if it’s transferred.
If you transfer money into your SIPP from another pension, the final pension benefits you receive could be less than if you stayed in your existing scheme.
If you’re in any doubt about the benefit of transferring, we recommend that you take advice from a suitably qualified, professional adviser before arranging the transfer. There will normally be a charge for that advice.
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Most experts will tell you not to keep all your eggs in one basket, as it’ll help you to diversify and manage your overall risk appetite.
You can deal in a wide range of investments, each of which carries a different level of risk. The value of your SIPP depends on the level of risk and potential performance of the investments you choose. It’s always worth doing your research first but past performance is not a guarantee of how investments will perform in the future.
But remember, investment performance can go down as well as up and you may get back less than you originally invested. Some investments may need to be held for longer term to achieve a return.
If the value of your SIPP is small and you deal regularly in smaller amounts, dealing costs could be disproportionately high and erode the value of your SIPP.
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Your retirement benefits are not guaranteed. If you start to take income earlier than planned, the total amount may be lower than expected and may not meet your needs in retirement.
Your SIPP value may not be large enough to provide income for as long as you intended, in instances where you take a higher than planned level of income (for example as a flexi-access Drawdown) over a long period of time.
If you take a large proportion of income in a short period, you may end up paying a higher rate of tax than usual.
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Your money is protected
Investments totalling up to £85,000 are protected by the Financial Services Compensation Scheme. This limit applies to the combined total of stocks or cash holdings in these brands that we administer.
This is in addition to any savings you hold across Lloyds Banking Group.
Important legal information
The Lloyds Bank Direct Investments Service is operated by Halifax Share Dealing Limited. Registered Office: Trinity Road, Halifax, West Yorkshire, HX1 2RG. Registered in England and Wales no. 3195646. Halifax Share Dealing Limited is authorised and regulated by the Financial Conduct Authority under registration number 183332. A Member of the London Stock Exchange and an HM Revenue & Customs Approved ISA Manager.
Lloyds and Lloyds Bank are trading names of Lloyds Bank plc. Registered office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales No. 2065. Lloyds Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 119278.
