SIPP frequently asked questions

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

If you’re UK resident under 75, you can usually add as much as you earn and receive tax relief each year. There is also an annual allowance (£60,000 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.

Learn more about paying into your pension

Tax rules can change over time and the relief you receive depends on your circumstances.

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.

All investments can rise and fall in value. Unfortunately it is not possible to get guaranteed high returns. Broadly speaking, the higher the return you are aiming for, the higher the risk that you lose some or all of your investment. For context, you may like to view the cash saving rates available through our separate Active Savings service.

Many people are happy to take a higher risk to potentially achieve a higher return. Before doing so you should make sure you understand the risks and whether you would be entitled to compensation should anything go wrong.

Unfortunately, there are investment scams out there which target people who've withdrawn, or plan to withdraw money from their pension and other accounts. They can also persuade people to transfer their pension to another pension within which there is an investment scam. These scams tend to involve firms and/or investments which aren’t regulated by the FCA, so if you fall victim to them there may be no compensation available.

Often fraudsters will attempt to make their ‘sales pitch’ as realistic and attractive as possible. They’ll aim to build a rapport with you – sharing fake reviews, using convincing literature and websites or claiming to be regulated. Warning signs can include cold calling or texting, pressure to act quickly, the promise of unique or unusual opportunities, the offer of quick and easy profits or something that seems too good to be true. Scammers might also offer free pension reviews and the chance to release money from your pension early, which isn’t normally allowed before age 55 under current pension legislation. You can find out more at www.fca.org.uk/scamsmart or by visiting our security centre.

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 (£60,000 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.

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 £220,000 in some cases.

Get your carry forward factsheet

There used to be a limit to the total value of pension benefits you could build up throughout your lifetime and generally receive up to 25% tax free. This limit was known as the lifetime allowance and was set at £1,073,100 for most people. However, from 6 April 2024, the lifetime allowance was abolished and replaced with three new allowances. These are the lump sum allowance, the lump sum and death benefit allowance, and the overseas transfer allowance.

Find out more

When you die your SIPP can be passed to your beneficiaries, in most cases free from inheritance tax. (From 2027, where an estate is valued over the inheritance tax threshold, some pensions may be subject to 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.

‘What happens to your pension when you die’ factsheet

You can see the current interest rates paid in our accounts here.

Yes, every UK resident under 75 can make pension contributions, even those with no earnings.

Their contributions will receive 20% automatic tax relief even if they pay no tax.

They can contribute up to £3,600 each year - a payment of £2,880 to which the government automatically adds £720.

This is a very tax-efficient way to invest for a non-earning spouse, child or anyone who's already retired.

Tax rules can change. Before applying, please understand the risks and features of the HL SIPP.

Read more on the HL 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. There is no charge to reinvest 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:

1. Log in to your account

2. Select the ‘Account settings’ tab at the top right

3. Choose the ‘Withdrawals, income and loyalty bonus’ tab

4. Choose the ‘Edit income instruction’ option

Yes, the majority of bonds are eligible in a SIPP. There is no theoretical barrier, however the bond must be listed on a stock exchange.

You can open a SIPP with us from £100 or with a Direct Debit from £25 per month.

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

SIPP investment ideas

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).

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.

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 contact us. 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.

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 and the annual allowance.

You can view your account charges by logging in to your SIPP, choosing the ‘Account Administration’ tab, then selecting ‘View history of fees charged’.

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. There is no additional charge for this.

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.

1. Log in and click on the 'Account Settings' tab

2. Select the ‘Fees and Minimum Cash Balance’ section

3. Click on 'Edit fee collection options' and follow the instructions

You can transfer most types of pension to the HL SIPP:

• Personal and stakeholder pensions

• Pensions in drawdown

• Retirement Annuity Contracts (RACs)

• Self-Invested Personal Pensions

• 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)

If you’re part of a defined-benefit (DB) pension, such as a ‘final salary’ scheme, transferring your pension to a personal plan is probably not in your best interest. These pensions not only give you a guaranteed income, they also normally offer benefits to a spouse or partner after you die. You might be able to transfer, but if the transfer value is more than £30,000, you’ll have to take advice from a regulated financial adviser and provide proof that the advice is in favour of transferring.

If your pension is transferred as cash, this means your provider will sell your pension investments, and transfer the cash amount to your HL SIPP. You will not be invested during the transfer, so you will not make losses or gains. You can buy investments once the transfer is complete. This usually takes 2-4 weeks, depending on your provider.

If your pension is transferred as it is (invested in the stock market), your provider will transfer each investment and any cash to your HL SIPP. If you hold an investment we do not offer, we’ll contact you during the transfer to confirm your preference. This type of transfer usually takes 6-8 weeks, but can take longer depending on your investments and provider. You stay invested during the transfer, so could make gains and losses. Usually you cannot trade until the transfer completes. Please note, we can only accept online applications of this kind for existing Self-Invested Personal Pensions or Small Self-Administered Schemes. If you hold a different pension, and are eligible to transfer your investments, please contact our helpdesk on 0117 980 9926 for a postal application.

We don’t charge you to transfer your pension, but you should check with your current provider if they’ll charge you any exit fees, or if you’ll lose any guarantees by transferring. Make sure you do this before you start your transfer.

View our SIPP charges

Yes, but normally only if you’re 55 or over. You’ll need to transfer your pension first. Then, once your transfer is complete, you can apply to take money from the HL SIPP.

If you have share certificates you will need to lodge them within an HL Fund and Share Account first. Then you can use our Share Exchange Service to move them into your HL SIPP. This service involves selling your shares held within an HL Fund and Share account and buying the same shares back again within the HL SIPP, all with one online instruction. This process is sometimes called a Bed and SIPP.

More on the share exchange service

When you reach age 55 (57 from 2028), you’re free to start withdrawing money from an HL SIPP, even if you’re still working. You can usually take up to 25% of your pot tax free (up to a maximum of £268,275 for most people). The rest of your withdrawals will be taxed at your marginal rate (the rate of income tax you pay).

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.

Learn more about your retirement options

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.