MEGATHREAD: Freetrade SIPP

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950

anyone having issues with tax relief?

10 weeks since I made my first contribution - nothing showing in the app.

951

Guidance is that it takes between 6-11 weeks to claim tax relief.

For me, usually the tax relief lags the contribution by roughly 2 months and gets paid around the 20th of the month. As an example I expect to get tax relief for my October contribution in a week or so.

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952

thanks. will keep an eye on it

953

ive decided to transfer (will be cheaper as well here), hoping it goes smooth and the market doesn’t crash so I can get that nice transfer bonus :smiley: (if the app will let me open a sip account again :grimacing: )

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954

I’ve done another partial transfer too. Hoping it completes soon :joy:

955

I initiated 2 pension pot transfers before Christmas and they were both in my account before the year end (2 weeks roughly). Futhermore I have the benefit of having a free share (in 90 days after the offer ends) and I will be saving on the fees charged by the previous providers, which are around 0.15% of the pension value, charged annually.

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956

Failed to add that I will also have the flexibility to chose the investments on my pension. I had a look at the “lifestyle” funds that I was invested in these pensions, and they are quite heavy on the UK equities, which is not ideal.

957

@acamp @adam - haven’t seen this mentioned before? HMRC are requiring SIPP providers to also offer drawdown capabilities or risk being deregistered? This was just pointed out to me when I requested transfer from ii to Freetrade
 see section 5
 Newsletter 152 — July 2023 - GOV.UK (www.gov.uk)

958

Thanks for flagging this, @Biyka.

We do offer a drawdown option now, partly to address this requirement.

Was the transfer being blocked because of this requirement?

DM me if you’d like.

Alex

959

Thanks - will send dm.

960

Where is this advertised? There have been many comment/questions about a lack of option and never seen any comment to say there was one. Obviously I may have missed it but many others will have also.

Edit - The only thing I ever found on the FT site is the below which says is not a drawdown option.

Is an uncrystallised funds pension lump sum different to drawdown?

Yes.

You can use both drawdown and UFPLS to take benefits from just some of your pension fund or from all of your pension at once.

With UFPLS you take money out of your pension as a lump sum payment 25% of which is normally tax free and 75% taxable. With drawdown you can normally take up to a quarter (25%) of the money in your pension fund as a tax-free lump sum. The rest is moved to a drawdown pension fund, where it is available to provide taxed income. You can start taking your income straight away or wait until a later date and take your income at times to suit you.

If you take money from your pension fund using UFPLS, the amount you can pay into your pensions and get tax relief on in the future is restricted. With drawdown the same restrictions apply, but only once you have taken taxable income (not the tax-free cash) from your pension.

Please note, currently there is no option to take benefits as drawdown from your Freetrade SIPP and you would need to transfer some or all of your pension fund to another pension plan in order to take your pension benefits using drawdown.

961

Sorry you’re right @Big-g. I didn’t use “drawdown” correctly there. We have an option to take money from you pension - the uncrystallised lump sum option you highlighted.

Obviously as we develop the SIPP product we will continue to develop the options for customers reaching retirement age. At the moment (as we’ve said) if you will need to take money from your pension soon you may wish to transfer to an alternative product.

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962

Thanks @acamp - it doesn’t sound to me like this will be sufficient to satisfy HMRC based on the link above?

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963

I think the terminology around ‘taking’ a pension and ‘drawdown’ are two different things.

964

Thanks for flagging this. We worked with our pension administrator last year on this and they and we were satisfied that our options satisfied these requirements.

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965

Thanks - that has put my mind at rest.

966

“You can put up to 100% of your salary in a personal pension and get tax relief but if you put more than the Annual Allowance (currently £40,000) you’ll face a tax charge. The annual allowance covers all pension contributions to any pension scheme, so both yours and your employer’s.”

I read this from somewhere in the FT website.

  1. This means I can keep my work pension scheme and SIPP separately?

  2. The tax relief will be automatically calculated in each pension pot?

967

The allowance is currently 60k if you earn up to that much.

Yes you can keep your SIPP and company pension separate.

I believe with a SIPP you get the basic rate tax back automatically but would need to claim the additional 20 or 25 percent back from HMRC through self assessment.

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968

Thanks, it is clearer. So I would need to claim tax relilef by myself because SIPP will only make tax back 20% and the rest 20% tax for the SIPP contribution amount I should claim tax relief.

I did not know SIPP until now and this is really good, as long as FT integrety is safe and sound?

969

I’ve got a freetrade sipp and have honestly loved using it.

I transferred in some smaller pots from older employer pensions and have made the odd top up by making a partial transfer to my freetrade sipp from my current work place pension.

Discipline is the key though with the sipp, and not going too heavy in one or two particular shares if this is truly for your retirement.

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