Frequently asked questions
Give your old pensions a better chance to grow
What is a SIPP?
A SIPP is a self-invested personal pension. It works much the same way as other personal pensions. You add money to your pension as and when you like. The government pays in an extra 20% in pension tax relief. If you pay a higher rate of tax, you’ll usually be able to claim back even more via your tax return. Once it’s in your SIPP, your money can grow free from UK tax.
Traditional personal pensions tend to offer between a dozen and several hundred funds. But their charges can be hefty, particularly on older plans. Stakeholder pensions have lower charges, but tend to offer a more limited choice of funds.
The wide investment choice in SIPPs can make a significant difference to your pension. That’s because how your investments perform can have a large impact on the size of your pension pot and then your retirement. SIPPs can be low-cost if you are happy choosing your own investments without advice. The charges will vary depending on the SIPP provider and the service they provide. See our HL SIPP charges
What’s the most I can add to a SIPP?
If you’re UK resident, you can usually add as much as you earn and receive tax relief each year. There is also an annual allowance (£40,000 for most people) which limits what you can pay in. Each contribution includes the money you put in, as well as what the government adds in tax relief.
Tax rules can change over time and the relief you receive depends on your circumstances.
What is a portfolio?
A portfolio is a collection of investments. It can include a mix of shares, funds, and other investments.
With an HL SIPP, you can choose your own investments to create your own portfolio.
Or you can choose a ready-made portfolio to hold in your SIPP, and leave the choice of investments to us. You'll just need to keep an eye on it to make sure it's still right for you over time.
What is tax relief?
Every UK resident under 75 qualifies for basic-rate (20%) tax relief on pension contributions, even children and other non-taxpayers. You can usually add whichever's highest out of the amount you earn, or £3,600, and receive tax relief each year. There is also an annual allowance (£40,000 for most people) which limits what you can pay in. Each contribution includes the money you put in, as well as what the government adds in tax relief.
This basic-rate tax relief is added to your pension automatically. Your pension provider claims it for you from the government and adds it to your pension.
If you pay higher-rate tax (40%) you can claim up to a further 20% in tax relief through your tax return or local tax office.
Top-rate taxpayers (45%) can claim back up to a further 25%. You must pay enough tax at the relevant rate to claim back the full amount.
If you’re a Scottish taxpayer the amount of tax relief you can claim is different. Take a look at our information on the Scottish income tax changes page.
Tax rules can change over time and the relief you receive depends on your circumstances.
What is carry forward?
If you haven’t used your full annual allowance from previous years, you might be able to carry it forward and use it in the current tax year. This could mean you can make a contribution of up to £160,000 in some cases.
What is the Lifetime Allowance?
This is the total amount you can have in all your pensions together over your life without incurring a tax charge. It’s currently £1,073,100 in the 2020/21 tax year.
Your pensions are measured against this allowance whenever you take money from your pension and/or when you turn 75, or if you were to die before the age of 75 and have money in your pension that you’ve not started to take.
If you’ve already built up a large pension pot, you might be able to register for protection with HMRC so you don’t get caught out by this restriction. Tax rules can change.
What happens to my SIPP when I die?
When you die your SIPP can be passed to your beneficiaries, in most cases free from inheritance tax.
- If you die before you’re 75, your beneficiaries can normally withdraw what they like from your pension without paying tax.
- If you die after your 75th birthday, withdrawals will be taxed as the beneficiary’s income, depending on their withdrawals and other income.
You can nominate one or more beneficiaries. This is usually a spouse or child, but it can be anyone you like and any number of people.
You can change your beneficiaries online at any time. Just log in to your account and choose Account Settings, followed by Manage SIPP beneficiaries.
Please remember tax rules may change in the future.
Opening a SIPP
What’s the minimum I need to open an HL SIPP?
You can open a SIPP with us from £100 or with a Direct Debit from £25 per month.
What can I invest in?
In the HL SIPP you can invest for your retirement by choosing from:
- Over 2,500 funds
- UK and overseas shares
- Bonds, investment trusts, and exchange-traded funds (ETFs)
- Ready-made investment portfolios built by our experts
How do I open a SIPP with investments I already have?
Opening an account with investments you already have means selling them, moving the cash to your SIPP account, and buying your investments back. This process is called Bed and SIPP.
How do I open a SIPP with cash from my HL Fund and Share Account?
The fastest way to open a SIPP using cash from your Fund and Share Account is online. Please read the key features (including contribution checklist) and terms and conditions (including tariff of charges) first.
- Log in to your Fund and Share Account.
- Select the 'Cash' tab.
- Select ‘Transfer Money’ in the quick links on the right of the screen.
You can also do this over the phone or by post.
How do I set up a Direct Debit for my SIPP?
You can set up a Direct Debit for your SIPP from £25 a month. Direct Debits can go into funds, FTSE 350 shares, selected investment trusts & exchange-traded funds (ETFs), or be held as cash.
To get started, log in to your account and select the ‘Monthly Savings’ tab.
Direct Debit payments will leave your bank account on the 7th of each month (or the next working day), and be invested on the 10th (or the next working day).
Can I open a SIPP for someone else?
Yes you can put money into someone else's SIPP, perhaps your spouse, partner, child or grandchild, and they'll receive tax relief at the basic rate (20%). If they pay tax at a higher rate, they will be able to claim additional tax relief via their tax return.
This won't affect your own tax bill. If they've got no income, you can still pay in up to £2,880 a year, which becomes £3,600 when the £720 tax relief is added on top.
A SIPP needs to be opened by the account holder if they are an adult, so that means you can’t open a SIPP on behalf of your spouse or partner. If the account holder is under 18, then a parent must open the SIPP for them.
Anyone can put money into someone else’s SIPP. If you’re not already an HL client, we might need you to complete a short form so we have a record of your details.
Can my employer pay into my SIPP?
Yes, your employer can make contributions to your HL SIPP but before applying, it’s important you understand the risks and features.
If you’re authorised to make payments on behalf of the company and you’ve registered your company details with us, you can use your company’s debit card to make contributions to your HL SIPP online. Unlike a cheque or bank transfer, you won’t have to wait for the cheque to arrive or your money to clear. It will be available to invest right away.
Simply log in to your account as normal and click the blue ‘Top up’ button. You’ll see the ‘Employer contribution’ tab, where you can enter your company debit card details and make a gross contribution to your SIPP.
If you’d like to register your company details with us so you can make contributions online, just call 0117 980 9926. We can set everything up in one phone call.
If you aren’t authorised to make payments on behalf of the company, your employer can pay in by cheque, bank transfer, and/or Direct Debit. Employer contributions are paid gross. This means basic-rate tax relief is not deducted from the contribution. We also accept employee contributions which are paid by the employer and deducted from net pay (after tax and National Insurance). To do this, please visit our employer contributions page.
Can I have more than one pension?
You can have as many personal pensions as you like. But you must make sure your total contributions to all your pensions don’t exceed your personal contribution limits, the annual allowance, and the lifetime allowance.
Managing your SIPP
How do I add money to a SIPP?
The quickest way to add money to your SIPP is online or with the HL app. Please read the key features (including contribution checklist) first, then:
- Log in to your account with the HL app or online
- Under ‘Actions’, choose ‘Top up’
- Follow the instructions to add money with your debit card
How do I withdraw money from my SIPP?
When you reach your 55th birthday (or your 57th from 2028), you’re free to start withdrawing money from your SIPP, even if you’re still working. You can usually take up to 25% of your pot tax free. The rest of your withdrawals will be taxed as your income.
You can take your whole pension in one go, or in smaller amounts as and when you want. You could also take money from your pension as a regular income, with an annuity or drawdown. Or you can leave your pension invested if you don’t need it yet.
When it comes to choosing how to take money from your pension, just remember you may need your pension to last throughout your retirement.
Pension Wise is the government’s free, impartial pension guidance service, created to help you understand your retirement options. Visit www.pensionwise.gov.uk or call 0800 138 3944 to find out more.
What happens to any income from investments in my SIPP?
You can decide what happens to any income your investments make.
Reinvest your income
With this option, any income will automatically be used to buy more of your investments once it reaches £10 per holding. If you’d like, you can choose your own reinvestment level between £10 and £1,000. Reinvestments are made between the 11th and 21st of each month. If you’d like any share income automatically reinvested, we charge 1% of the trade value (minimum £1, maximum of £10). There is no charge to reinvest fund income.
Keep your income in your SIPP as cash
Your income will stay in your account as cash with this option. You can use the cash to pay charges, or reinvest it yourself when you choose.
Here’s how to change your preferences:
- Log in to your account
- Select the ‘Account settings’ tab at the top right
- Choose the ‘Withdrawals, income and loyalty bonus’ tab
- Choose the ‘Edit income instruction’ option
Please see the SIPP charges page to view all SIPP and dealing charges.
Where can I see the charge I owe?
You can view your account charges by logging in to your SIPP, choosing the ‘Account Administration’ tab, then selecting ‘View history of fees charged’.
How do I pay charges?
You don’t have to worry about remembering to pay charges, because we’ll take them from your account automatically each month.
We take charges from any cash in your SIPP.
How much cash you’ll need depends on the value of your investments. We’ll suggest an amount for you based on your holdings, which you can see in your SIPP when you log in. Just look for suggested minimum balance in your account dashboard.
What happens if there's not enough cash in your account
If there’s not enough cash in your SIPP to pay charges each month, we’ll take charges from any cash in your HL Fund and Share Account (if you have one). If there’s not enough cash in your account, we’ll sell some of your investments to cover charges. To sell shares, we'll charge £1.50 per deal. There is no charge to sell funds.
You can set up an alert and we’ll notify you if there’s not enough cash available.
Paying charges from a different account
If you’d like to always pay your SIPP charges from cash in your HL Fund and Share Account, it’s easy to set this up online.
- Log in and click on the 'Account Settings' tab
- Select the ‘Fees and Minimum Cash Balance’ section
- Click on 'Edit fee collection options' and follow the instructions
Transferring to an HL SIPP
Which types of pension can I transfer to the HL SIPP?
You can transfer most types of pension to the HL SIPP:
- Personal and stakeholder pensions
- Retirement Annuity Contracts (RACs)
- Other SIPPs
- Most Additional Voluntary Contribution plans (AVCs) including Free Standing AVCs
- Executive Pension Plans (EPPs)
- Most paid-up occupational money purchase pensions
- Old protected-rights pensions accrued from contracting out of the State Second Pension or SERPS (State Earnings Related Pension)
- Pensions in drawdown
If you have a final salary pension or another pension type not listed above, please give us a call on 0117 980 9926 and we may be able to help you transfer.
How long does it take to transfer?
Usually it takes between four and six weeks to transfer a pension to the HL SIPP, but if you’re an existing client transferring online is often much quicker. Please check you won’t lose valuable benefits or incur excessive exit fees first. We’ll contact your provider for you, and we’ll let you know when your transfer is complete.
Unless otherwise arranged, your pension will be transferred to the HL SIPP as cash. This mean you will miss any rises or falls in the stock market.